Russia’s economy will shrink by close to 5 per cent this year, the European Bank for Reconstruction and Development has said in its latest forecast, while average growth for eastern Europe and the former Soviet Union will fall into negative territory for the first time since 2009.
The development bank for the former communist bloc said plunging oil prices and western sanctions would lead to a contraction in Russia of 4.8 per cent this year, compared with its September forecast of a 0.2 per cent drop.
The EBRD also forecast that Ukraine’s economy would shrink 5 per cent in 2015, on top of a 7.5 per cent decline last year. The bank warned that Ukraine’s foreign exchange reserves were “dangerously low”, adding it was “concerned” at the time being taken to put together a new international financial aid package.