Russian Slump Eases for Second Quarter as Putin Sees Optimism

  • Recession tempered to 3.8% drop last quarter, Ulyukayev says
  • Russia at risk of second year of recession after crash in oil

Russia’s recession eased for a second quarter, giving President Vladimir Putin ground for what he called “cautious optimism” as the economy struggles against renewed pressure from turmoil in energy prices and the ruble.

Gross domestic product shrank 3.8 percent in the last three months of 2015 on an annual basis, after declines of 4.1 percent and 4.6 percent in the previous two quarters, Economy Minister Alexei Ulyukayev told Putin at a meting in Moscow on Tuesday. The country is adapting to lower oil prices and changes in the exchange rate, Ulyukayev said.

“The year wasn’t simple,” Putin said. “However, we also have grounds for cautious optimism for the current and the coming period.”

The assessments run counter to the drumbeat of economic gloom after Russia closed last year with its first contraction since 2009. It’s now at risk of a second year of recession after crude prices resumed their slump at the start of 2016, sending the ruble tumbling to a record. Alfa Bank on Monday cut its estimate for the nation’s outlook to a decrease of 1.5 percent, joining analysts from Renaissance Capital to Societe Generale SA in revising forecasts downward.

GDP fell 3.7 percent in 2015 after growth of 0.6 percent a year earlier, the Federal Statistics Service said Monday. A separate release of December consumer data the same day showed spending continued to decline as real wages and disposable incomes fell further.

The ruble lost 5.5 percent against the dollar this year, the fourth-worst performer among its emerging-market peers tracked by Bloomberg after the currencies of Mexico, Argentina and Colombia.

Annual inflation will ease to about 10 percent in January from 12.9 percent in December, Ulyukayev said. The central bank wants to bring price growth to 4 percent by the end of 2017.

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