Russia faces two years of recession as the sharp fall in oil prices adds to the problems of an economy beset by structural weakness, the European Bank for Reconstruction and Development has warned.
The EBRD, set up after the collapse of communism in the early 1990s, said Russia would contract by 4.5% in 2015 and by almost 2% in 2016, with knock-on effects on neighbouring countries.
And it warned that an escalation of the conflict with Ukraine could, in extreme circumstances, become a threat to the global economy.
Publishing economic forecasts at the start of its annual meeting in Tbilisi, Georgia, the EBRD said: “Deep recession in the Russian economy is having larger-than expected negative spillover effects on countries with which it has strong economic links. The impact of the Russian downturn has worsened the outlook for eastern Europe and the Caucasus and for central Asia.”
Russia could face a protracted period of slow growth or stagnation, it said, exacerbated by the fact it is overly dependent on the oil and gas sector. “Low oil prices and sanctions have taken their toll on an already weak economy with deep-seated structural problems,” the EBRD said.
via The Guardian