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Russian crisis-hit economy slumped 4.1% in 3Q

Thursday, November 12, 2015 - 23:15

[Moscow] Russia's economy shrank 4.1 per cent in the third quarter this year, official statistics showed on Thursday, as a recession caused by low oil prices and Western sanctions over Ukraine continued to take its toll.

The preliminary figures released by state agency Rosstat represent a slight improvement on government forecasts of a 4.3 per cent year-on-year fall but still show that Russia's economy is mired deep in trouble.

Russia's government estimates that the economy will shrink by around 3.9 per cent in 2015 before recovering slightly by 0.7 per cent in 2016.

The World Bank in September predicted the Russian economy would shrink by 3.8 per cent in 2015 in its baseline scenario, a far steeper decline than an earlier forecast of a 2.7-per cent contraction.

The downturn in 2015 could be as much as 4.3 per cent if oil prices continue to drop and average around US$50 a barrel over the year, the bank said.

The World Bank in September ditched its earlier forecast of a gentle recovery with 0.7 per cent growth in 2016. It now expects Russian economic output to decline 0.6 per cent next year, with a recovery only appearing in 2017 with growth of 1.5 per cent.

The poverty rate has climbed to 15.1 per cent, representing 21.7 million people, in what the World Bank called a "troubling rise" exacerbated by increasing food prices.

In some regions, more than 35 per cent of the population live in poverty, it said.

The International Monetary Fund estimates that Western sanctions imposed on Moscow over its meddling in Ukraine could cost Russia about nine percent of GDP in the medium-term.

AFP