Russia’s economy shrank in the first quarter at a faster pace than previously estimated as a weaker currency and a surge in inflation eroded consumer buying power.
Gross domestic product contracted 2.2 percent from a year earlier, the first drop since 2009 and down from a previous estimate for a 1.9 percent decline, the Federal Statistics Service in Moscow said on Monday. GDP grew 0.4 percent in the fourth quarter.
The world’s largest energy exporter is entering its first recession since 2009, prompting the central bank to cut interest rates four times this year. Consumer demand, which powered the economy for more than a decade, has sputtered because of the ruble’s decline in 2014 and inflation near the fastest in 13 years.
“Major macroeconomic indicators demonstrate further economic cooling,” the central bank said in a statement on Monday after cutting its benchmark rate by a point. “The economic situation will depend on the dynamics of energy prices and the economy’s ability to adapt to external shocks.”
Wholesale and retail trade plunged 7.6 percent in the first quarter, compared with a 0.6 percent decline for manufacturing, the data showed.
The economy will contract about 4 percent in the second and third quarters, according to Bloomberg surveys. GDP may fall 3.2 percent in 2015, the central bank said Monday.
The ruble has partly recouped losses this year after a crash in oil prices and sanctions over Ukraine stoked its worst crisis since 1998. It’s the world’s best performer globally against the dollar with an 11 percent gain after losing almost half of its value in 2014. The Russian currency traded little changed at 54.7890 to the dollar as of 3:45 p.m. in Moscow.