MOSCOW (Reuters) – Economic growth in Russia slowed to 1.6% in the first quarter, preliminary data showed on Tuesday, before sliding into a projected contraction in the second quarter caused by lockdowns aimed at curbing the new coronavirus outbreak.
Russia’s economy took a double hit in March and April, both from the coronavirus pandemic, which has paralysed much business activity, and from a slump in global prices for oil, its chief export.
The preliminary assessment released by the Federal Statistics Service on Tuesday missed expectations for growth of 1.9% seen in a Reuters poll of analysts and was below the 2.1% growth seen in the last three months of 2019.
Before the COVID-19 outbreak, economic growth in Russia had been expected to gain pace in 2020, picking up from 1.3% in 2019 thanks to the state spending program of the new government.
The first quarter data did not capture the lockdowns that Russia started to imposed in late March.
The data for the second quarter “will be much worse and, with the virus outbreak not under control and fiscal support limited, the risk of a more sluggish economic recovery than we anticipate is rising,” Capital Economics research firm said.
The central bank has said Russia’s commodity-dependent economy may shrink by up to 8% in year-on-year terms in the second quarter and contract between 4 and 6% in the whole of 2020.
To cushion economic contraction, the central bank slashed its key rate by 50 basis points in late April and promised to consider a 100 basis point cut in June.
Data on economic performance in April, the first full month of lockdowns, is expected to be released by the economy ministry later this month.
(Reporting by Andrey Ostroukh and Elena Fabrichnaya; Editing by Gareth Jones)