Russian Q1 economic contraction less than feared at 1.9%

15th May 2015, Comments 0 comments

Russia's economy shrank 1.9 percent in the first quarter under pressure from low oil prices and Western sanctions, the state statistics agency said Friday, a smaller contraction than earlier expected.

Russian Prime Minister Dmitry Medvedev last month estimated that the economy had shrunk by two percent year-on-year in the first quarter while Economy Minister Alexei Ulyukayev said the contraction could reach 2.2 percent over the same period.

Economic output expanded 0.4 percent in the last three months of 2014, according to official data.

"The best that can be said about Q1 GDP data from Russia is that the economy has avoided outright collapse and is, instead, merely on the cusp of recession," said Capital Economics, a consultancy.

Russia's economy has been hit hard by plunging oil prices and several rounds of Western sanctions over Moscow's meddling in Ukraine.

President Vladimir Putin has said the worst is over for the Russian economy and the government expects the country's economy to return to growth already next year.

After the shock collapse in the ruble last year, the currency has bounced back somewhat in recent months.

The European Bank for Reconstruction and Development, however, on Thursday predicted Russian output would shrink 4.5 percent this year and 1.8 percent in 2016.

© 2015 AFP

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