Russian Economy Plummets 10.1%

Russia’s economy shrank 10.1 per cent in the first half of this year, the economy minister said on Wednesday, its worst decline since the early 1990s. The credit crunch, falling commodity prices and a gradual rouble devaluation have shattered 10 years of rapid growth but there are signs that the pace of economic decline is slowing, the Financial Times reported. Economists said Russia was showing signs of nearing the bottom of a precipitous economic collapse as oil prices steadied at about $60 a barrel, after falling as low as $35 at the beginning of the year, and inflation started to slow. The economy ministry’s revised forecast for annual inflation is still high, at 12-12.5 per cent, but down from 13.3 per cent last year. Profits at Sberbank plummeted 98 per cent in the first quarter, the state controlled savings bank said this week, as it increased bad loan provisions 12-fold. “Even as the rest of the world is seeing more green shoots, the structure of the Russian economy is such that 2010 and throughout the rest of the year is still going to be difficult,” Anton Karamzin, the bank’s chief finance officer, told investors. Read more. (Subscription required.)