Russian economy faces deep recession amid global pandemic and oil crisis WB-ANI
Fueled by a deep global recession triggered by Covid-19, Russia’s GDP growth in 2020 is expected to contract by 6%, an eleven-year low, with a moderate recovery in 2021-2022, according to the latest economic report from the World Bank on Russia released on Monday.
The decline in Russian economic growth is further exacerbated by falling crude oil prices which fell 53% between January and May.
In 2020, overall household consumption is expected to decline by 4.9% and gross investment in fixed capital by 8%.
In April and May, negative growth was reflected in most sectors, with the manufacturing sector contracting 8.6% during this period; the extraction of mineral resources decreasing by 8.4%, leading to a rapid decrease in industrial production; and the transportation sector is experiencing a 7.7 percent contraction, driven by lower trade volumes since the start of the year.
“There are immediate impacts of the recession caused by the pandemic, such as a sharp rise in unemployment, falling real wages, reduced tax revenues and a weakened banking sector,” said Apurva Sanghi, lead author of the study and senior economist of the World Bank in Russia.
“The encouraging news is that prudent macro-fiscal policies and accumulated buffers have enabled the authorities to implement effective stabilization measures,” he said.
The report notes that the measures announced by the government could partly contain the increase in poverty induced by the crisis – if implemented properly.
However, he cautions that short-term impacts could be followed by deeper longer-term consequences marked by unrecoverable losses such as learning at critical ages, worsening chronic health problems, loss of life. permanent jobs and skills and small business bankruptcies.
The study also reveals that small towns and rural areas can experience the spread of the virus several weeks or months later.
Sectors that were not initially affected, such as agriculture, could be affected at later stages if disruptions in the availability of migrant labor, internal logistics, international trade or financial conditions make it difficult. the resumption of full production.
This year, the report takes a closer look at how the Covid-19 pandemic is affecting learning and education across Russia. School closures could result in a learning loss of more than a third of a Russian school year and the impact could mean a drop in Program for International Student Assessment (PISA) points.
“These losses are higher than those estimated for OECD and EU countries. In addition, there are equity issues: while students in the top quintile could lose around 14 PISA points, those in the bottom quintile could lose 18 points. Those 18 points translate into a loss equivalent to missing half of the year’s learning, ”said Renaud Seligmann, World Bank Country Director for Russia.
Looking ahead, the report concludes that in the absence of a second pandemic wave, a moderate recovery could begin with some positive momentum that is expected to push GDP growth into positive territory in 2021 to 2.7%. and in 2022 at 3.1%.
As uncertainty decreases, household consumption is expected to lead the recovery and investment will increase by around 3% in 2021.
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