World Economy

Russia CB Says Recession Almost Over

Russia CB Says Recession Almost OverRussia CB Says Recession Almost Over

Russia’s central bank says GDP figures show the country is moving out of its protracted recession and returning to tentative growth.

“The evaluation of the Russian GDP shows that the recession is now behind us and ahead is slow economic growth,” the bank said in a note Monday, AFP reported.

The Bank of Russia estimated that growth in the second quarter of 2016 hit 0.2-0.3% and said it had boosted its forecasts to 0.4% growth in the third quarter and 0.5% in the fourth quarter.

Russia has been battered by the longest recession to hit the country during President Vladimir Putin’s more than 16 years at the helm caused by low oil prices and Western sanctions over the Ukraine crisis.

Officials have previously insisted the recession is slowing and Economy Minister Alexei Ulyukayev predicted that the economy will shrink by 0.2% overall this year after a drop of 3.7% in 2015.

International experts however remain more downcast on Russia’s prospects with the IMF forecasting GDP will shrink by 1.2% this year.

The economic crisis has hit the spending power of average Russians hard as the ruble has tanked and the situation remains grim despite the apparent first shoots of recovery.

In a sign that the rebound is by no means certain, the car industry announced yet further woeful results with sales in July dropping by some 16.6% compared with the same month last year.

The car industry in Russia has been brutalized by the economic crisis and the latest statistics from industry manufacturers were even worse than the drop in 12.5% in June.

Car sales in Russia have almost halved as the economic woes have bitten into a market that once drew large investment from foreign auto giants.

  Need for Tough Reforms

Russia’s former finance minister Aleksey Kudrin has been working on a new program to develop the country’s lackluster economy which is suffering from low crude prices and international sanctions.

According to Kudrin, his team will hold regular meetings with Putin, and the program will be completed by next spring.

The former finance minister is calling for tough economic, social, and political reforms.

He says one of the biggest woes of the Russian economy is the budget deficit, which could be solved by raising the retirement age from the current 55 for women and 60 for men to 63 for everyone.

Kudrin also wants investment in the country’s economy to come mostly from the private sector, while the government should curb inflation and the budget deficit. He also stresses the stability of the economy should be backed by foreign reserves.