(Corrects growth figure for January in paragraph 2 to read 0.1
pct, not 0.7 percent)
By Darya Korsunskaya
MOSCOW, March 24 Russia's economy is barely
growing, inflation is rising fast, and capital is pouring out of
the country, the Economy Ministry said on Monday, a sign that
international tensions around Ukraine are already inflicting
severe economic costs.
In February Russia's gross domestic product eked out growth
of just 0.3 percent year-on-year, up from a revised 0.1 percent
in January, Russia's Deputy Economy Minister Andrei Klepach
Last year the economy grew by just 1.3 percent, far below
initial forecasts, but there had been hopes that growth would
rebound this year. Instead Russia's economic performance is
deteriorating further as the international tensions around
Ukraine lead capital to flee Russia.
Klepach said that when seasonal and calendar factors are
taken into account, February's 0.3 percent was "not bad" and
"better than expected."
But he added that "it's too soon to talk about a turn-around
in economic trends, about a recovery from stagnation."
He said that the ministry anticipates GDP growth of "around
zero" for the first quarter as a whole. That would make its 2.5
percent growth forecast for 2014 challenging.
"There won't be a recession, but there is a problem of
stagnation: it's length and depth. Unfortunately the investment
slump is continuing. I'm not ready to say how long it will
continue," Klepach said.
While Russia's economic growth slows, inflation is shooting
up. The Economy Ministry expects inflation to reach 6.9-7.0
percent in March, up from 6.2 percent in February.
The sharp rise illustrates how a slumping rouble is feeding
into higher import prices, as both Russians and foreigners
scramble to get out of rouble investments.
Klepach said that the Economy Ministry forecasts the net
capital outflow during the first quarter at $65-70 billion - and
"closer to $70 billion".
That compares with an outflow of $62.7 billion during the
whole of 2013.
He said that Russia's economic indicators have been
deteriorating, even though western sanctions against Russia have
so far had only a minor economic impact, because cool relations
between Russia and the West damage investor confidence.
"We considered in the forecast how the general deterioration
of our relations with developed countries and world markets is
having an influence," he said.
"Sanctions so far don't have a significant economic
character, but in itself a worsening of relations is a
significantly negative factor for economic growth and
correspondingly influences the capital outflow."
(Writing by Jason Bush; Editing by Jeremy Gaunt)