The Russian recession also threatens our region

The Russian economy is likely to sink into a deeper recession this year, than it was previously expected, primarily due to the low oil prices that were halved in the last six months, and it is expected that the whole region’s growth average will decline below zero this year – reveals this year's first overall forecast of the European Bank for Reconstruction and Development (EBRD) that was published on Monday in London.

Under the EBRD’s most likely scenario, Ukraine would return to recession in 2014, with a contraction of 7 per cent and show no growth in 2015. The Russian economy would stagnate in 2014 and show only minimal growth next year. However, there is an unusually high level of uncertainty surrounding the forecasts with major risks on the downside, according to EBRD.

Under a less-benign scenario including the imposition of financial sanctions in particular, Russia would slip into recession, the output contraction in Ukraine would deepen and average growth in the region would grind to a halt in 2014-15.

“At this point, the Russia-Ukraine crisis would start impacting the global economy,” the report says.