Russian economy faces worst contraction since 1994

(Bloomberg) — Russia is facing its sharpest economic contraction in nearly three decades, with gross domestic product likely to shrink by as much as 12% this year under pressure from sanctions imposed by the United States and its allies over the invasion of Ukraine, according to an internal estimate of the Ministry of Finance.

The government has yet to give a public projection, and the economy ministry forecasts an 8% decline, according to people familiar with the estimates who spoke on condition of anonymity to discuss internal deliberations.

The Finance Ministry figure would put the country’s economic woes on par with the difficulties seen in the early 1990s, when Russia’s Soviet-era economy lurched toward capitalism with a contraction not seen since the ages. of war.

The Bank of Russia said on April 29 that it expects a contraction of between 8% and 10% this year. The International Monetary Fund forecast a drop of 8.5%, while a Bloomberg survey of economists points to an average decline of 10.3%.

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If the Finance Ministry’s forecast is correct, such a contraction would wipe out about a decade of economic growth, according to a person familiar with the projections.

Uncertainty about the outlook remains very high as the war rages on and the US and its allies discuss new sanctions, including penalties on key exports such as oil, the people said.

The press services of the Finance and Economy ministries did not respond to requests for comment.

Nota Original:

Russia’s Economy Facing Worst Contraction Since 1994

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