Russia Warns It May Enter Recession As Soon As This Quarter

Russia Warns It May Enter Recession As Soon As This Quarter (ZeroHedge, April 21, 2014):

While hardly coming as a surprise to anyone, Russia is getting increasingly more vocal about the near certainty that the country is about to slam headfirst into a technical (at first), and then outright recession.

  • RUSSIA MAY ENTER `TECHNICAL RECESSION’ IN 2Q, ORESHKIN SAYS
  • RUSSIAN 2014 CAPITAL OUTFLOWS MAY REACH $70B-$80B: ORESHKIN
  • RUSSIAN 2014 CURRENT-ACCOUNT SURPLUS MAY EXCEED $50B: ORESHKIN
  • RUSSIAN GDP MAY CONTRACT IN 2Q OR 3Q VS YR EARLIER: ORESHKIN

Bloomberg reports that Russia’s economy may halt or contract in 2Q or 3Q, citing Maxim Oreshkin, head of Finance Ministry’s strategic forecasting dept.

It seems that we’ll get negative growth again in the second quarter compared with the previous quarter.” Oreshkin says

He added that capital outflows may reach $70b-$80b in 2014, while inflation spikes to 7.2%-7.3% y/y in April, and then peak in May or June at 7.5%. However, that will be it and promptly after inflation will slow by year-end to range of 5%-6%

Still, Russia’s Current-account surplus may exceed $50b in 2014, thanks mostly to net exports offseting the capital outflow.  Russia may use National Wellbeing Fund for Crimea infrastructure.

All of this was expected. The only question is how much the Russian recession, which will impact various local companies across the global trade chain, will impact the economy in nearby China and Japan, but mostly Europe. Then again, if there is one person who is praying daily that the Russian economy slams Europe is none other than Draghi, who would use this “external” shock to the “strong” European economy as precisely the wildcard justification needed to launch European QE, instead of bond monetization by the ECB being perceived as the testament to the ECB’s failure to spark inflation in Europe on its own for three years.

After all, it is always easier to blame someone for any unpopular actions you would have done anyway. In this case, Europe may actually just succeed.

4 thoughts on “Russia Warns It May Enter Recession As Soon As This Quarter

  1. Russia’s economy has changed drastically since 1990, but the bulk of the population outside the urban belt are still subsistence based, which effectively means immune to the rigours of the economic minefield of the western nations.

    Russia’s technology base is needed by India & China, who, despite many hiccups over deliveries & quality, prefer dealing with straight talkers than the forked tongued snakes of the west.

    Barroso, Van Rumpuy & Draghi personify a self gratifying dying ember of bureaucracy at its worst. These last ten years they have driven a flagship idea into an unrecoverable mire of confusion, debt and dictatorship. Not one has either the panache, quality or drive needed to create what the populace want, co-operation with identity. They are all just glorified civil servants wallowing in a now stagnant pond.

  2. Russia, unlike the other fool nations, is taking the bull by the horns. It let the central bank fail rather than start the TBTF nonsense of the west. They have a very smart man in power, and he has no intention of letting Russia go the way of the Sick Man of the Americas (US) and much of it’s followers.
    It might be tough, but at least he is dealing with facts, and working with what is true. He knows propaganda is only a tool for support, it cannot rule a nation.
    Russia, like Iceland, will come out of this much stronger, and they have a huge market for their many resources, unlike the US………

  3. Of course it is quite possible Vlad is playing CIA at own disinfo game.
    If the world thinks the sanctions ARE affecting them, they may act with haste and thus repent at their leisure.

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