Russian economy decline slows, but recovery elusive

The sharp decline in Russia's economy may have almost run its course, official data showed on July 28, slowed by a huge devaluation of the ruble and heavy government spending on anti-crisis measures. 

Recovery prospects are cloudy, however, with many analysts warning of a sluggish rebound at best. 

The economy has slumped as a result of Western sanctions linked to the Ukraine conflict and last year's collapse in the price of oil. But the decline now appears to arrested. 

While gross domestic product continued to decline in year-on-year terms in June - down 4.2 percent compared with 4.8 percent in May - seasonally-adjusted output fell just 0.1 percent month-on-month. 

The figure tallies with other recent data, leading analysts to conclude the decline is close to a bottom - a silver lining to data which still show most macroeconomic indicators sharply down compared with a year earlier. 

"It is kind of premature to speak about the recovery in sequential terms, which actually lies ahead," said Alexander Isakov, economist at VTB Capital in Moscow. "But in terms of year-on-year comparisons - the headline figure that everybody focuses on - we are bottoming out." 

Divergent views

Uncertainty about the pace of any recovery is reflected in official forecasts, which present sharply divergent views. 

The Economy Ministry predicts the economy will grow by 2.3 percent next year after a 2.8 percent decline this year. In contrast, Russia's central bank sees the economy growing by only 0.7 percent next year after declining 3.2 percent this year. 

Economists polled by Reuters expect 0.5 percent growth next year after a 3.5 percent contraction this year. 
Optimists emphasize the huge boost to...