Russian economy in the red as investment slumps and capital flies
Russia’s economy shrank in the initial 3 months of the year as investment spending fell and people who might transfer money from the nation did so in reaction to the risk of sanctions as well as the concerns over Ukraine.
GDP was down by 0.5 percent in the final quarter of a year ago, even though it increased by 0.8 percent year-on-year.
Economy Minister Alexei Ulyukayev said the economy is “not stable”.
He informed the Russian parliament: “In addition for the central elements which have slowed economic growth, we also provide a higher degree of anxiety about the international financial markets, significant capital flight along with a scenario when traders aren’t prepared to make investment decisions given the tense situation within the international market in the past two months.”
The International Monetary Fund’s growth forecast for this season has fallen from 1.9 percent to 1.3 percent.
The Russian government has cut its estimate from 2.5 percent growth to between 0.5 percent and 1.1 percent.
But Russia’s Finance Minister Anton Siluanov is much more cynical. 1 day earlier he explained the economy looks “the hardest conditions” because the worldwide financial crisis in 2008.
Within the worst-case scenario Siluanov thinks this season GDP may not develop at-all.
Economists have said the weakness shows Moscow can’t afford a war, or perhaps a continuous trade battle with West.