Russia to Enter a Prolonged Economic Recession in 2015

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  • Russian President Vladimir Putin. REUTERS/Alexei Nikolskiy/RIA Novosti/Kremlin

    Russian President Vladimir Putin. REUTERS/Alexei Nikolskiy/RIA Novosti/Kremlin

    TEMPO.CO, Jakarta - Russia's Ministry of Economic Development and Trade said on Monday, February 16, 2015, that Russia is likely to enter an long-term economic recession, beginning in 2015.

    The Ministry said that Russia's Gross Domestic Product (GDP) is predicted to grow by 2.1 percent if the government's anti-crisis measures are implemented smoothly. The prediction was 0.9 percent lower than its' previous estimate, as reported by Xinhua.

    Furthemore, Russia's production output is likely to be pressured by the decreased profit stemming from the contraction of Russia's energy exports, as well as the general rejection of Russian enterprises by the global financial market that logically follows the sanctions imposed on the nation.

    Data released by the Ministry also showed that Russia's budget deficit is expected stand at 4.6 percent of its' GDP. Russia's federal budget deficit is expected to amount to 3.8 percent, while the net deficit in Russia's oil and gas sector is forecasted to stand at 11.5 percent.

    According to information released on the Ministry's website, Russia's inflation figure in 2015 is expected to exceed its' previous estimate at 12.4 percent - possibly even reaching a high of 15.8 percent.

    The highest spike of inflation is expected in the months of March and April, where consumer price index is predicted to increase by 2.3 percent per month - after which the index is expected to slow to one percent.

    That said, the report also warned that inflation may still accelerate - especially considering that the Rouble might depreciate further as a result of Russia's moratorium on food imports, which came as a response to the sanctions imposed on Russia by Western powers.

    The Ministry also predicted that Russia's unemployment rate in 2015 could exceed six percent, as small-to-medium enterprises (SMEs) might move to freeze employee procurement for the time being - if not, lay off some of its' employees.

    It is known that Russia's economy is suffering under the pressure stemming from the continuously declining global crude oil prices, as well as the economic sanctions imposed on it by Western powers. As a response to mitigate the impact of such conditions, Kremlin had planned in January to embark on an anti-crisis austerity measures.