The Russian government on Monday said that its economy is in a crisis, as the U.S. and the European Union rolled out sanctions on the Soviet Union for its fervent support of Crimea’s split from Ukraine.
“The situation in the economy bears clear signs of a crisis,” said Deputy Economy Minister Sergei Belyakov in Moscow on Sunday. “The cabinet needs to refrain from raising the fiscal burden on companies, which would be the wrong approach. Taking money from companies and asking them afterward to modernize production is illogical and strange.”
Moscow markets are keenly analyzing the effect of the western sanctions after recently posting billion of dollars in losses in corporate and state money. The Russian economy has been facing its slowest growth in 5 years as higher consumption failed to offset weak investment.
The European Union has slapped visa banks on 21 Crimean, Russian and Ukrainian officials, while the United States has imposed sanctions on 7 Moscow officials.
In recent weeks, Russian officials have warned that the standoff between the West and Moscow over Ukraine will “weigh on the economy”. Most economics predict that the Soviet nation will enter recession, forcing them to revise their growth forecasts downwards.
Russia’s $2 trillion economy grew at 1.3 percent in 2013, up from 3.4 percent a year earlier; a figure President Vladimir Putin termed insufficient. The ruble has also plunged 9.4 percent to the dollar this year; the worst globally except for a few currencies such as the Argentinean peso, Zambian Kwacha and the Ukrainian hryvnia.
Consumer price growth in Russia edged up to 6.2 percent last month, up from 6.1 percent in January.
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