By Andrey Ostroukh
MOSCOW, Aug 11 – Russia’s economy contracted 8.5% year on year in the second quarter, preliminary data showed on Tuesday, as the country took a hit from the coronavirus pandemic and related lockdowns as well as a drop in prices for oil, its key export.
After growing 1.6% in the first quarter, Russia’s economy slid into contraction as the coronavirus outbreak paralysed much business activity, prompting the central bank to slash rates to a record low.
The Federal Statistics Service, or Rosstat, said only Russia’s agriculture sector grew in the second quarter, while commodity, retail, transport and services sectors were hardest hit.
Economic contraction in the second quarter, the first quarterly set of data from Rosstat to capture lockdowns that Russia started to impose in late March, was not as deep at a 9% drop predicted in a Reuters poll of analysts in late June.
The Russian economy ministry was also more pessimistic in July when it said gross domestic product had shrunk 9.6% in April-June, while Russians’ real disposable income, a sensitive political matter, plunged the most in 20 years.
In the whole of 2020, the Russian economy is likely to shrink by 4.5-5.5% before returning to growth in 2021, according to the central bank, which had expected second-quarter contraction at 9-10%.
Before the COVID-19 outbreak, growth in Russia had been expected to gain pace in 2020, picking up from 1.3% in 2019 thanks to the state spending programme of the new government.
Analysts and economists in Reuters polls in the past few months predicted that the Russian economy would return to growth in annual terms no earlier than in the second quarter of 2022. (Additional reporting by Darya Korsunskaya)