Azernews.Az

By Bloomberg

Russia lowered its economic forecasts for this year and next year as a renewed plunge in energy prices sank the ruble and sanctions over Ukraine look set to persist.

Gross domestic product in the world’s largest energy exporter will fall 3.3 percent in 2015 before rebounding as much as 2 percent in 2016, Economy Minister Alexei Ulyukayev said Tuesday in Kuala Lumpur, the Interfax news service reported. The ministry had earlier projected a 2.8 percent contraction followed by 2.3 percent growth.

Russia’s slump reached a “fragile” bottom last month, Ulyukayev said, predicting an improvement in the economy in the fourth quarter. “I don’t think we’ll go any lower but it’s hard to say when we’ll see significant growth.”

Russia, mired in its first recession in six years, is battling a new wave of oil-price weakness that’s sent the ruble to its lowest against the dollar in seven months. Adding to the pain, Foreign Minister Sergei Lavrov said Monday that U.S. and European sanctions over the conflict in Ukraine will remain in place for a “very long” time. Ulyukayev said the measures, which curb access to capital markets, will stay through 2018.

With oil having plummeted to a six-year low, the ruble is the world’s worst-performing currency in the past 12 months, dropping 48 percent, data compiled by Bloomberg show. That’s stoking inflation, which accelerated to a 13-year high of 16.9 percent in March.

Consumer-price growth will ease to somewhere above 11 percent on an annual basis by year-end, Ulyukayev said. Oil prices may fall to less than $40 a barrel in the short term before rising to an average of about $55 next year, Ulyukayev said Monday, according to Interfax.