Moscow: The Russian economy has entered recession, a deputy minister of economic development said on Friday, according to the Interfax and RIA Novosti news agencies.
“The recession in Russia has begun. There will be two quarters” of economic contraction, the minister, Andrei Klepach, was quoted as saying by RIA Novosti.
A recession is defined as at least two consecutive quarters of economic contraction.
Klepach said Russian growth for 2008 would fall short of the previously forecast 6.8%, citing setbacks in industrial production and the wider economy that began in October, along with the full onset of the global financial crisis.
“A major drop began in October and there will also be in November-December,” he said, according to RIA Novosti.
The Russian economy has been hit hard by the global economic crisis despite initial claims by officials that it would be an island of stability amid the turmoil.
Moscow’s stock markets have lost more two-thirds of their value since posting record highs in May and the central bank has spent tens of billions of dollars in recent weeks to contain a slide in the value of the ruble.
Fallout from the global crisis and a plunge in the price of oil are expected to sharply cut the rapid growth that Russia has enjoyed in recent years. The country’s economy grew 8.1% in 2007 and 7.4% in 2006.