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Russia’s recession has deepened, and this one could last a while

People walk with flags at Red Square during a 2015 May Day rally in Moscow.
Reuters/Maxim Zmeyev
There’s going to be more than a few frowny faces in Moscow for the next few months.
By Melvin Backman
Published Last updated This article is more than 2 years old.

Back in March, Russian officials said its economy had passed through the worst of its troubles. They were they wrong.

The country’s year-over-year GDP growth figures dropped 4.6% during the second quarter. That followed a 2.2% contraction in the first quarter.

In a note Monday (August 10), Bank of America told clients it doesn’t think positive growth will return to Russia until next year. Sanctions and falling oil prices continue to weigh the economy down. Then there’s currency pressures (paywall) and inflation.

“Consumer demand has been limited by weak wage growth due to weakening economic activity, which has been further undermined by the sharp spike of inflation,” the BofA analysts wrote. “The economy has also been restricted by fiscal austerity due to the sharp decline in tax revenues.”

The World Bank said the same thing back in April—shortly after Russia said everything would be fine soon.

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