World Bank forecasts Russia's GDP to shrink 4.5 per cent in 2009

31 March 2009

In its semi-annual report, the World Bank forecast Russian economy to contract by 4.5 per cent in 2009 against the 3 per cent predicted last November.

Russia's economy which is largely dependent on export revenues of oil and gas products, has been severely affected by the slump in oil prices, fall in demand, and tightening of credit  available for companies,  driving the economy into deep recession causing poverty and unemployment. The World Bank said in its Russian economic report on Monday.

The figure is more than double the more optimistic Russian government estimate of 2.2 per cent shrinkage in GDP for the year, which had hoped that the worst wouild soon be over and the economy would be on a recovery path by the end of the year.

The World Bank is more pessimistic in its assessment.

''As the crisis continues to spread to the real economy around the world, initial expectations that Russia and other countries will recover fast are no longer likely,'' the report said.

"With a much worse global financial outlook and oil prices in the $45 a barrel range, Russia's economy is likely to contract by 4.5 per cent in 2009, with further downside risks," the World Bank said. The first signs of recovery could be seen only in the first or second quarter of 2010, the report added.