2015 Russ-cession on its way, warns IMF

According to the international organisation, the Russian economy will fall into recession this year due to on-going EU-US sanctions and the drop in oil prices

 
Oil prices and EU-US sanctions have hit Russia hard, and the country is likely to fall into recession this year as a result, the IMF has warned. Experts expect the economy to resume growth next year, but not enough for a full recovery
Oil prices and EU-US sanctions have hit Russia hard, and the country is likely to fall into recession this year as a result, the IMF has warned. Experts expect the economy to resume growth next year, but not enough for a full recovery 

Russia’s GDP is expected to fall by as much as 3.4 percent this year, according to the IMF. The poor economic performance is the result of a reduction in domestic demand and made worse by stagnating wages, increased capital costs, and weaker consumer confidence.

The economy should resume growth next year

However, the real problem for the country comes from pressure applied by the international community, with extended EU-US sanctions against Moscow serving to deleverage the ruble and limiting market access.

The economy should resume growth next year, as inflation continues to gradually decline. But full economic recovery is unlikely, with sanctions restricting medium-term growth in the country to just 1.5 percent a year.

In an attempt to stabilise the economy and bolster its struggling financial system, Russian authorities have moved to a floating exchange rate and increased overall FX liquidity. The government also introduced a large fiscal stimulus and a limited wage indexation in order to mitigate the disinflationary process.