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Russian economy likely to be in recession at end of Q2 - Economy Minister
May 13, 2014 / 11:01 AM / 3 years ago

Russian economy likely to be in recession at end of Q2 - Economy Minister

KALININGRAD, Russia, May 13 (Reuters) - The Russian economy is likely to shrink again in the second quarter, putting the country into a recession, Economy Minister Alexei Ulyukayev said on Tuesday.

Gross domestic product might fall between 0.0-0.1 percent in April-June, after shrinking on a quarter-on-quarter basis by 0.5 percent in the first three months of the year, Ulyukayev told reporters on a visit to the Russian city of Kaliningrad.

A technical recession “is possible”, Ulyukayev said, referring to a common definition of recession when a country experiences economic decline for two quarters in a row.

The forecast follows a similar warning earlier this month from the finance ministry and is in line with the view of the International Monetary Fund, which said in late April that Russia was already “experiencing recession”.

Ulyukayev, a former deputy governor at the central bank, said the central bank should lower its key lending rate, which the bank has raised by a cumulative 200 basis points in the past two months to 7.5 percent.

“I would do it (cut rates), based on the economic situation and on the basis of the forecast for inflation,” he said.

Inflation, a long-time plague for Russia, has been pushed higher in recent months due to the weakening of the rouble. But the rate is broadly expected to decline in the second half of the year when the local harvest and ample supply of fruit and vegetables bring foodstuff prices down.

Ulyukayev said he sees the inflation rate peaking at 7.5-7.6 percent in May and staying at that level through June.

The central bank aims to curb inflation to no more than 6 percent by the end of the year. (Reporting by Gleb Stolyarov; Writing by Lidia Kelly, editing by Jason Bush/Jeremy Gaunt)

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