Russia’s gross domestic product shrank by 4.2% in June from a year earlier but the contraction was shallower than May’s revised 4.8% fall, adding to signs the economy may have started to stabilize.
The economy ministry said on Tuesday that GDP fell 0.1% in June compared to the previous month in seasonally-adjusted terms, less than a decline of 0.4% in May and 0.5% in April, Reuters reported.
Russia’s growth prospects deteriorated sharply midway through last year, when an existing slowdown was compounded by western economic sanctions over the Ukraine conflict and a collapse in the price of oil, the country’s main export earner.
The economic slide gathered pace from the start of 2015 as falls in retail sales and real wages deepened, reflecting weak consumer demand and high inflation linked to the weaker ruble.
But economic data released earlier this month showed falls in many indicators remained little changed in June from a month earlier. Unemployment unexpectedly fell and the decline in capital investment was less pronounced. That suggests the bottom for the economy may not be far off.
“We are reaching a bottom in terms of the year-on-year comparisons,” said Alexander Isakov, economist at VTB Capital in Moscow. “It is kind of premature to speak about the recovery in sequential terms, which actually lies ahead, but in terms of year-on-year comparisons–the headline figure that everybody focuses on–we are bottoming out.”
