Russia may be headed for an economic downturn this year and it would be the biggest one since the 2008-2009 meltdown, analysts told Nezavisimaya Gazeta.
The growth of gross domestic product (GDP) in Russia slowed down to 0.5 percent in the first quarter of this year from the same period a year ago, official data shows.
According to expert estimates, the looming crisis is largely man-made, since the main reason for it chiefly includes the government’s tinkering with taxes.
Rough estimates by Loko-Invest say the drop in annual GDP growth rates means that in Q1, the economy declined by about 1.6%.
“This is the most serious quarterly failure since the 2008-2009 crisis. Neither the collapse of oil in 2014, nor the sanctions could cause the same failure of the economy, which we have done ourselves by raising taxes,” says Kirill Tremasov, Director of the Analytical Department at the investment company.
Among some other reasons that could adversely affect economic growth, the expert highlighted the “sharp deterioration in the economic situation in Western Europe and Turkey, which led to a decline of Russian gas exports; the oil production cut within the OPEC+ deal; enormous capital outflows; and a tight budget policy.” According to Tremasov, all these factors will continue to impact economy and lead to the GDP losing steam in the current quarter, which would mean the economy is in recession.
Still, not all experts tend to believe in the onset of a crisis.
“Of course, GDP growing by 1.5-1.8% per year, pales in comparison to some developing countries, which in the last 10 years have been growing by an average of 5.5% per year, but here sanctions play a big role,” Alexey Antonov, an analyst at Alor Broker told the newspaper. According to him, if there is no major drop in oil prices, then “we can avoid a crisis” at least until the next election cycle in 2024.