The OECD now expects Russia’s annual GDP growth to come in at just 1.2% in 2020 — down from the 1.6% it predicted at the end of last year.
The report, titled “Coronavirus: The World Economy at Risk” published Monday, comes after a historic week in the financial markets, which saw billions of dollars wiped out as stock markets tumbled. In Russia, the ruble-denominated RTS index dropped 21% in recent weeks from previous highs, pushed lower as oil prices fell to near $50 a barrel. The ruble has also weakened by around 5% against the U.S. dollar.
After opening with strong gains in morning trading, stock markets in Russia and Europe lost momentum as the day progressed, leaving them still well below levels recorded before last week’s rout.
Lower oil prices put pressure on the Russian state budget, which relies on oil exports for a significant portion of its income, just as President Vladimir Putin plans to increase spending in a bid to improve Russians’ sluggish living standards.
Russia’s economic development minister Maxim Reshetnikov also warned Monday that the impact of the coronavirus on the Russian economy will be worse than originally expected.