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29 May, 2020 10:37

Russian economy shrinks 12 percent in April as coronavirus restrictions paralyzes business activities

Russian economy shrinks 12 percent in April as coronavirus restrictions paralyzes business activities

Russia’s gross domestic product (GDP) fell by 12 percent year-on-year in April, when the countrywide non-working period to contain the spread of Covid-19 was in place.

The steep decline eliminated the modest economic growth seen during the first three months of 2020, when the Russian economy expanded by 1.6 percent compared to the same period last year, according to the Ministry of Economic Development.

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Given the disappointing April results, the ministry now estimates that Russia’s GDP shrank by 1.9 percent over the first four months of this year.

The ministry explained that the negative growth came as non-essential businesses remained closed for the whole month and negative economic conditions prevailed worldwide.

Russia introduced coronavirus-related restrictions in late March and has prolonged the measures several times since then in order to battle the spread of infection. The paid non-working period ended on May 12.

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Sectors of the economy focused on consumer demand suffered most. For example, consumer services fell by more than a third due to restrictions on leisure, culture and sporting activities, while retail sales dropped by a nearly a quarter. Although stores and food retailers remained open the whole time, their turnover also fell by 9.3 percent.

According to an earlier forecast, the second quarter could be the most painful for the Russian economy, as it is expected to shrink by more than nine percent. The nation’s annual GDP contraction is set to stand at five percent, while the country expects to return to pre-coronavirus levels no sooner than the first half of 2022.

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