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Russian economy to enter prolonged recession phase in 2015 — ministry’s forecast

February 16, 2015, 20:05 UTC+3 MOSCOW
The country's GDP is expected to contract by 3% amid persistently strong geopolitical risks and the presumption that average annual oil prices will equal $50 per barrel
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© Artyom Geodakyan/TASS

MOSCOW, February 16. /TASS/. The Russian economy will enter a stage of a prolonged recession in 2015, according to a specified macro-economic forecast for this year released by the Economy Ministry on Monday.

"GDP is expected to contract by 3% amid persistently strong geopolitical risks and the presumption that average annual oil prices will equal $50 per barrel. Forecasts show that the Russian economy will enter a phase of a prolonged decline in 2015," the document said.

The production dynamics in 2015 will be mainly affected by a contraction in export revenues from the sale of energy products on world markets and the closure of world capital markets for Russian companies.

These factors taken together will reduce Russian households’ real disposable money incomes, which will result in reduced consumer demand and investment activity, the Economy Ministry said.

At the same time, production will be supported by a considerable build-up of profits in the economy, mainly as a result of the weakened ruble, as well as by a sharp fall in the imports of goods and services.

An insignificant drop in industrial production (by 1.6%) will be a factor opposing the general economic decline in 2015. Industrial production will fall due to a sharp contraction of output in the manufacturing industries along with stagnation in export-oriented oil extraction and some slowing in gas production, the ministry said.

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