Rus­sia’s econ­omy has been in re­ces­sion for 18 months

The Star (St. Lucia) - - INTERNATIONAL -

Rus­sia has just marked 18 months of a deep and painful re­ces­sion. The coun­try’s econ­omy was 0.6% smaller in the sec­ond quar­ter of 2016 than the same pe­riod last year, ac­cord­ing to of­fi­cial data pub­lished on Thurs­day. But there is a glim­mer of hope for Rus­sians who have seen their liv­ing stan­dards suf­fer over the last year and a half - the pace of the slow­down is start­ing to ease. The econ­omy shrank by 1.2% in the first quar­ter, fol­low­ing a 3.7% plunge in 2015.

Rus­sia has been hit by a dou­ble whammy of low oil prices and eco­nomic sanc­tions, and has not grown for six con­sec­u­tive quar­ters. The sanc­tions im­posed on Moscow over its role in the cri­sis in Ukraine have se­verely cur­tailed in­vest­ment into the coun­try, and cut Rus­sian firms off from Euro­pean and Amer­i­can fi­nance.

Pres­i­dent Vladimir Putin slashed spending across his govern­ment to deal with the cri­sis. He even cut his own salary by 10% in 2015. The ru­ble crashed against the dol­lar in 2015, push­ing inflation up into dou­ble dig­its. Inflation has since eased but prices were still ris­ing by 7% in July.

Mil­lions of Rus­sians have fallen into poverty since 2014, as a Rus­sian em­bargo on most food im­ports from the West pushed prices even higher. Real wages dropped 10% last year.

There have even been sev­eral protests against the eco­nomic cri­sis - a rare sight in a coun­try where po­lit­i­cal demon­stra­tions are of­ten banned.

Rus­sia holds par­lia­men­tary elec­tions next month and the coun­try’s lead­ers are try­ing to re­as­sure vot­ers that the econ­omy is fi­nally turn­ing the cor­ner.

The govern­ment raised the min­i­mum wage by 20% in July, and the cen­tral bank said this week it ex­pects Rus­sia to re­turn to “slow growth” in the com­ing months, bar­ring any new shocks.

The IMF ex­pects the Rus­sian econ­omy to shrink 1.2% this year, be­fore re­turn­ing to growth next year.

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