Record drop in Russian GDP
The Russian economy shrunk 10,9 percent in second quarter of 2009. That is the worst figure on record.
Rising unemployment and decreasing consumer demand, stalled bank lending and the government’s failure to approve a stimulus package are the main reasons for the situation, the Moscow Times reports with reference to figures from the Statistical Service. The economic downturn is the worst since the Statistical Service started its monitoring in 1995.
The serious drop in economy comes after many years of growth. However, that growth was not sustainable, economist Natalya Orlova from the Alfa Bank told the newspaper.
“Because of high oil prices, capital came in; banks transferred this capital into the economy [..] Rising wages fed consumer growth, so there was no reason to invest or create new production. Now, capital has stopped coming in, and consumption has stopped. This model has ceased to exist. We don’t have a new one”, she said.
As BarentsObserver reported the GDP shrinkage comes together with a 45,4 percent year-on-year drop in Russian foreign trade and major cuts in national budgets.
Russian Finance Minister believes it will take up to five years for the economy to recover, BarentsObserver reported this week.
