IMF says Russia is in recession

The International Monetary Fund said today that Russia is already in recession and slashed its growth forecast for 2014 citing the effect of the Ukraine crisis on investment.
"If we define recession as negative growth in two quarters in a row, then Russia from that point of view is experiencing recession," IMF economist Antonio Spilimbergo was quoted as saying by the Interfax news agency.
The IMF has lowered its 2014 growth forecast for Russia to 0.2 per cent from the 1.3-per cent figure it issued on April 8, Spilimbergo said.
"There is a risk that it could be lowered further," Spilimbergo noted.

Russia's economic growth has been falling for the last few years but the Ukraine conflict with its recurrent threat of military action in Europe has seen massive capital flight and the ruble fall to levels not seen since the 2008 global financial crisis.
So far the economic strains have not affected President Vladimir Putin's personal popularity, with the independent Levada polling agency today putting his approval rating at 82 per cent.

The IMF's decision came taking into account "the difficult current situation and the significant level of uncertainty related to geopolitical tensions and sanctions," Spilimbergo was quoted as saying in comments translated into Russian.

"This all has a very negative effect on the investment climate," he said.
"We expect that the fall in investments that already took place in 2013 will increase further this year."
In the latest round of sanctions announced this week, the United States and the European Union focused on Putin's close circle and their businesses as well as pro-Russian leaders in eastern Ukraine.
The IMF said that the current prediction is based on the scenario that there will be a gradual reduction of tensions in Ukraine, while a continuing conflict could lead to further sanctions and worse economic results.
Russia's economy contracted by about 0.5 per cent in the first three months of the year compared with the previous quarter.

The finance ministry warned this month that the economy could tip into recession in the second quarter.
Finance Minister Anton Siluanov said this month that Russia could see growth of 0.5 per cent in 2014 but warned growth could be only "around zero".