[LINK] "Russia Faces Reality With Prediction of Deeper Economic Slump"

[rfmcdonald]

Bloomberg's Anna Andrianova and Olga Tanas report on Russia's economic misery. It's worth noting, I suppose, that one reason given for Russia's interventions into Ukraine was to prevent the country suffering economic losses via Ukrainian integration with the European Union.

While insisting the worst of its recession was over, [the Russian government] cut its economic forecasts for this year and next amid the renewed plunge in energy prices and persistent sanctions over Ukraine. Economists said the revisions fell short of their estimates predicting an even deeper contraction.

Gross domestic product in the world’s largest energy exporter will fall 3.3 percent in 2015, down from an earlier projection of a 2.8 percent decline, Economy Minister Alexei Ulyukayev said Tuesday in Kuala Lumpur, according to the Interfax news service. After hitting a “fragile bottom” in July, the economy will rebound by as much as 2 percent in 2016, from an earlier estimate of 2.3 percent growth, he said.

The earlier forecast “was from some other reality,” Olga Lapshina, head of research at Bank Saint-Petersburg PJSC, said by phone. “The Economy Ministry always tries to find something positive, even in the worst situation. They often have more a positive forecast than the market average.”

Mired in its first recession in six years, Russia is battling a new wave of oil-price weakness that’s sent the ruble to its lowest level against the dollar in seven months. Adding to the pain, Foreign Minister Sergei Lavrov said Monday that U.S. and European sanctions over the conflict in Ukraine will stay in place for a “very long” time. Ulyukayev said penalties will remain through 2018.