Russia’s economy shrank 4.3 percent in the third quarter this year, the government said Monday, as a recession caused by low oil prices and Western sanctions over Ukraine continued to take its toll.
Deputy economy minister Alexei Vedev told Russian news agencies that preliminary estimates put the year-on-year drop in gross domestic product for the third quarter at 4.3 percent, after contracting by 3.8 percent in September compared with 4.6 percent in August.
Officials in Russia are struggling to breathe life into the economy as the ruble has dropped precipitously in value and inflation and poverty have risen sharply.
Overall, the economy shrank 3.8 percent for the first nine months of the year, Vedev said.
In a sign of how tough the situation has become, official statistics released Monday showed that consumer spending in the country is falling at its steepest rate in 15 years.
Year-on-year retail sales fell by 10.4 percent in September, the sharpest drop since 2000 according to RIA Novosti news agency, as Russians have seen their spending power stripped away by the crisis.
Statistics showed that real household incomes dropped by 9.7 percent in September on the back of a 9.8 percent plunge in August.
Russia’s government estimates that the economy will shrink by around 3.9 percent in 2015 before recovering slightly by 0.7 percent in 2016.
The World Bank last month predicted the Russian economy would shrink by 3.8 percent in 2015 in its baseline scenario, a far steeper decline than an earlier forecast of a 2.7-percent contraction.
The downturn in 2015 could be as much as 4.3 percent if oil prices continue to drop and average around $50 dollars a barrel for the year, the bank said.
The bank ditched its earlier forecast of a gentle recovery with 0.7 percent growth in 2016. It now expects Russian economic output to decline 0.6 percent next year, with a recovery only appearing in 2017 with growth of 1.5 percent.
The poverty rate has climbed to 15.1 percent, representing 21.7 million people, in what the World Bank called a “troubling rise” exacerbated by increasing food prices.
In some regions, more than 35 percent of the population live in poverty, it said.
The International Monetary Fund estimates that Western sanctions imposed on Moscow over its meddling in Ukraine could cost Russia about nine percent of GDP in the medium-term.
Ratings agency S&P said last week that the outlook for Russia’s recession-hit economy remains weak, predicting it would only expand by about 0.4 percent annually between 2015 and 2018.