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Russia's Economy has Experienced the Biggest Collapse since 2009
August 11, 2020 20:11


The Russian economy, amid the coronavirus pandemic, fell at its fastest pace since the 2008-2009 crisis.

According to preliminary estimates of Rosstat, Russia's GDP in the second quarter fell by 8.5% in annual terms. This is the maximum drop since the third quarter of 2009 (then GDP fell by 8.6% yoy). However, the result turned out to be better than estimated by the Ministry of Economic Development in mid-July (minus 9.6%). The preliminary assessment was made on the basis of operational data on the dynamics of production of large and medium-sized enterprises in the non-financial sector of the economy, and will subsequently be updated. In the first quarter, the Russian economy grew by 1.6%.

In April-June, added value fell in all sectors of the economy, except for agriculture, where it grew by 3.1%. Extraction of minerals fell by 10.3%, retail trade turnover - by 16.6%, passenger transportation - by 79%, catering - by 48.9%, paid services to the population - by 37.2%.

The economic downturn in the second quarter was uneven. In the plan for economic recovery prepared by the government, three groups of economic sectors were distinguished depending on the scale of the decline in production. The first is completely closed industries, which together account for 10% of gross value added: catering, hotels and tourism, non-food retail (except for essential goods), the bulk of personal services, and passenger air transport. The second group of industries is partially closed (46% of gross value added): these are non-continuous-cycle manufacturing industries, construction, professional services, logistics, storage and management of real estate. The third group included industries that continued to operate during the lockdown (44% of gross value added): agriculture, mining, continuous manufacturing, electricity and water supply, production of essential goods, pharmaceuticals and healthcare.

In May, the Russian economy passed the lowest point of the recession caused by the coronavirus epidemic, Central Bank analysts wrote in the newsletter What Trends Talk About. In June, the economic situation began to improve, but the failure of the previous two months was not compensated. In general, the fall in GDP in the second quarter was estimated by the Central Bank economists at 9.5-10% in annual terms.

Author: Anna Dorozhkina

Tags: Russian economy Russian business coronavirus economic crisis  

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