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2 Feb, 2021 12:02

Fallout from Covid-19 crisis sees Russia report worst GDP drop since 2009 - but much less severe than most other European states

Fallout from Covid-19 crisis sees Russia report worst GDP drop since 2009 - but much less severe than most other European states

After 10 months of restrictions to battle Covid-19, including a period with one of the strictest lockdowns in the world, Russia’s federal statistics service says that GDP decreased by an estimated 3.1 percent in 2020.

It is the first time Russia’s GDP has dropped since 2015, amid falling oil prices, and the most severe decline since 2009 when 7.8 percent of the economy was wiped out during the global financial crisis.

Rosstat, the government statistics agency, also pointed to a decrease in world energy prices, a significant factor for the country’s finances. In early 2020, the value of oil saw a steep drop as Russia and Saudi Arabia engaged in a price war, with the cost of a barrel crashing in March and April.

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However, it was the Covid-19 pandemic and related restrictions that did the most damage. Rosstat revealed that hotels and restaurants were among the worst hit, with cultural and sports institutions also feeling the pinch. Not all sectors saw losses, however, with finance and insurance growing by 7.9 percent.

Despite grim numbers for Moscow, the country’s GDP estimates are relatively healthy compared to the rest of Europe. The latest projections from the International Monetary Fund (IMF) reveal that the Eurozone lost 7.2 percent of its economy, including nine percent in France and 11.1 percent in Spain. The GDP of the UK is also estimated to have contracted by 10 percent.

On March 25, Russian President Vladimir Putin announced an official paid week of holiday due to Covid-19, instructing the country to shut down all non-essential services. This was eventually prolonged to May 11. After the end of national measures, each individual region was given the ability to make its own rules.

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