MOSCOW: Russia’s battered economy will shrink by a far worse than expected 4.8 percent this year, as plunging oil prices add to fallout from the Ukraine crisis, the EBRD development bank forecast Monday.
The London-based European Bank for Reconstruction and Development (EBRD) sharply revised its September prediction for a 0.2-percent contraction for the economy of the key oil producer in 2015.
A sharp fall in the price of oil has piled pressure on an already fragile Russia, and is hitting growth in energy exporters and other emerging nations with close links to eastern Europe’s largest economy,” the EBRD said in its economic outlook for the bank’s investment zone.
Oil prices have slumped by almost 60 percent since June, hit hard by global oversupply, the strong dollar and weak crude demand arising from the stuttering world economy.
Russia’s economy is also buckling under the weight of Western sanctions over the Kremlin’s actions in Ukraine – which remains plagued by unrest – and tit-for-tat sanctions imposed on the West in response. Russia has strongly denied sending weapons and troops into the war zone despite witness claims to the contrary.
At the same time, Russia’s economy has been plagued by the tumbling value of its ruble currency, separate data showed on Monday. Net capital outflows from Russia more than doubled in 2014 to US$151.5 billion, prompted by the Ukraine crisis and the plunging value of the ruble, according to statistics from the central bank.
