MOSCOW May 6 Russia's economy is likely to
shrink again in the second quarter of 2014, a senior finance
ministry official was quoted as saying on Tuesday, after
contraction began in the first three months of the year.
The ministry said economic performance in the third quarter
would largely depend on the level of geopolitical uncertainty, a
clear reference to the crisis over neighbouring Ukraine, which
has seen Western sanctions imposed and scared off investors.
Maxim Oreshkin, director of the ministry's long-term
planning department, said output of electricity, freight
transport and gas production had been weak in April and that
business activity indicators did not give rise for optimism,
according to the state-run RIA Novosti news agency.
"Everything points to GDP (gross domestic product) for the
second quarter declining compared with the previous quarter,
seasonally adjusted, for the second time in a row," Oreshkin was
quoted as saying.
The forecast was in line with the view of the International
Monetary Fund, which said last week that Russia was already
Earlier on Tuesday, the Organisation for Economic
Co-operation and Development cut its forecast for Russian growth
this year by almost four-fifths, to 0.5 percent from a previous
2.3 percent, saying the impact of events in Ukraine had halted a
modest recovery under way at the end of 2013.
The IMF last week took an even more gloomy view, cutting its
2014 growth forecast for Russia's oil- and gas-based economy to
just 0.2 percent from an earlier 1.3 percent.
Russia's economy grew 1.3 percent last year.
The IMF said Ukraine-related sanctions, imposed by the
United States and the European Union, were scaring off
Russia's central bank unexpectedly raised interest rates for
the second time in less than two months on April 25, hiking its
main rate by 50 basis points to 7.5 percent to prevent a
weakening rouble fuelling inflation.
The finance ministry had said last month that growth in the
remaining quarters of this year would be close to zero and could
contract in one of them.
The economy ministry has said the economy contracted by 0.5
percent in the first quarter and that growth may not exceed 0.5
percent for the year.
Oreshkin was quoted as saying third-quarter performance
would also depend on how sharply bank lending slowed against the
background of the central bank's rate rise and "a substantial
rise in money market rates".
(Reporting by Nigel Stephenson; Editing by Ruth Pitchford)