Russia's Economy Contracts By 4.6 Percent in Three Months
Russia's economy shrank by 4.6 percent in the second quarter of 2015 compared to the same period las…Russia's economy shrank by 4.6 percent in the second quarter of 2015 compared to the same period last year according to the country's official statistics office Rosstat. This represents a contraction of more than twice the size of the one reported for the first quarter of 2015 (2.2 percent) and marks Russia's worst recession since the 2009 financial crisis.
Russia's economy is currently struggling due to a combination of factors including U.S. and EU trade sanctions imposed because of the ongoing Ukraine conflict, Russia's own import sanctions on European food imports and the drop in price of the country's vital export—oil. The crisis saw the rouble depreciate by 46 percent to the dollar last year, with Russian President Vladimir Putin estimating the country would take two years to exit the recession.
The latest depreciation has surprised analysts and has exceeded the preliminary estimates by the Russian Ministry of the Economy for this year's second quarter. Economy Minister Sergey Ulyukaev estimated last month that the Russian economy would shrink by 4.4 percent in the second quarter of this year, according to independent news agency Interfax. Ulyukaev boasted that Russia was ahead of schedule in its recovery this year, but in light of the latest figure, he admitted on Tuesday that the government may have to revisit its projections for the remaining two quarters of the year, Russian business daily Kommersant reports.
"Probably there is reason to seriously think about this. I cannot rule out reviewing (the projections)," the minister said. "I believe that in the third quarter, there will be an improvement."
A poll by Russia's Levada Center in June found that 50 percent of Russians felt they have been impacted by the financial crisis in a negative way. Sanctions have led to an increase in the prices of commodities including dairy products, fresh fruit and vegetables. However, the same poll also found that the majority of Russians still believed the country was headed in the right direction, despite being worse off personally.
Meanwhile the government's decision to bulldoze, incinerate and discard food imports from Europe has prompted ridicule and outrage online, with a petition to reverse the law and redistribute food to Russia's growing number of impoverished people, gathering tens of thousands of supporters.
"Sanctions have led to a considerable rise in prices of agricultural produce on Russian supermarket shelves," the petition's authors wrote. "Why should we destroy food which could feed war veterans, pensioners, the disabled, families with many children, victims of natural disasters and other groups in need?"