Russia is enduring its first recession in six years after last year’s currency crisis and sanctions over Ukraine closed access to capital markets and caused a surge in inflation. The ruble has depreciated about 43 percent against the dollar in the past 12 months. Since January, the inflation has been above 15 percent and retail sales have been declining sharply. Also, from March to June, industrial production dropped on average 5 percent each month.
Outlook for the Russian economy has deteriorated so far in the third quarter as commodity prices remian low. Russian economy relies on oil and gas for about half of its budget revenue. Last month, the central bank said that its forecast for a 3.2 percent contraction this year may worsen as domestic demand remains very weak. The country is set for a two-year recession if crude prices remain at USD60 through 2016, including a 1.2 percent slump next year, the central bank said.