Russia’s economy shrank the most since 2009 after a currency crisis jolted consumer demand, while a selloff in oil threatens to drag the country into a deeper recession.
Gross domestic product contracted 4.6 percent in the second quarter from a year earlier after a 2.2 percent decline in the previous three months, the Federal Statistics Service in Moscow said on Monday, citing preliminary data. That was worse than the median forecast for a 4.5 percent slump in a Bloomberg survey of 18 analysts. The Economy Ministry had projected that output shrank 4.4 percent in the period, calling it “the lowest point” for Russia.
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A crisis in consumer demand is spilling over to industry as low oil prices ripple through the economy. Urals, Russia’s export blend of crude, averaged $57 in the first half, down almost 47 percent from the same period a year earlier, according to the Economy Ministry. Industrial production fell for a fifth month in June, the longest slump since 2009, and manufacturing unexpectedly deteriorated in July.
“The economic prospects for the coming quarters look pretty grim,” Liza Ermolenko, an analyst at London-based Capital Economics Ltd., said by e-mail. “Industry appears to have been a major cause behind the deterioration in the second quarter, having gone from being a relative bright spot in the first quarter.”
A renewed slide in commodity prices may put the central bank in a bind if it destabilizes the ruble and reignites inflation. Consumer prices rose 15.6 percent in July from a year ago, down from a 13-year high of 16.9 percent in March. The central bank forecasts inflation at 10.8 percent by year-end and says its 4 percent target will be reached in 2017.