Gross domestic product tumbled an annual 9.8 percent, compared with growth of 1.2 percent in the previous quarter, the Moscow-based Federal Statistics Service said in a statement on its Web site today.
The world’s biggest energy supplier is falling into its first recession in a decade after the global slowdown sapped demand for its commodities and companies struggled to find funds. The government’s stimulus package has failed to spur bank lending, even as the central bank cut its main interest rates three times since April.
Manufacturing fell 23.5 percent in the first quarter, compared with a revised 6.6 percent expansion in the same period last year. GDP may slump as much as 8 percent in 2009, Economy Minister Elvira Nabiullina said last month, after growth of 5.6 percent in 2008 and 8.1 percent the year before.
The economy contracted in May at the slowest pace since October, shrinking 6.8 percent from a year earlier, as slumps in manufacturing and service industries eased after record declines in April, according to VTB Capital’s GDP indicator, a gauge of economic growth, published on June 4.
Rising crude oil prices will help the country narrow its budget shortfall and reduce the use of the Reserve Fund, one of its two sovereign wealth funds, Prime Minister Vladimir Putinsaid during a meeting in Moscow on June 9.
The deficit, Russia’s first in a decade, may reach 10 percent of GDP this year, according to the Finance Ministry. The Reserve Fund may be exhausted by the end of next year, Finance Minster Alexei Kudrin said.