Some 1.8 million Russians lost their jobs in the first three months of 2009, taking the jobless rate to an 8 year-high, data showed on Monday in a sign that it may be too soon to talk about the bottoming of the crisis. Officials had been saying that the worst of the crisis may be over for Russia, taking heart from higher global oil prices, a stabilisation of the rouble and a recovery in domestic stocks.
But with retail sales, real wages and capital investment all falling sharper than expected in March, the data suggests that Russia's first economic contraction in a decade is still very much in full swing. "We see this data as an indication that ... the decline is starting to spread to consumer demand and it will continue to pressure the economy over the next several quarters at least," said Vladimir Osakovsky, analyst at Unicredit.
"Overall I think the data really calls for an interest rate cut in Russia and possibly some weakening of the rouble to help exporters and the domestic economy in general." The releases come as the Finance Ministry frets that a deeper than expected slowdown could slash budget revenues by a further 800 billion roubles ($23.91 billion) this year, taking the budget deficit to 10 percent.
The government expects a contraction of just 2.2 percent in 2009, but international organisations and think tanks have said the slowdown could be at least twice as sharp. Steering Russia through the financial crisis after years of oil-fuelled economic boom poses a key challenge for politicians. The relationship between President Dmitry Medvedev and Prime Minister Vladimir Putin is under scrutiny by investors and diplomats after speculation the allies could be drifting apart as they grapple with the economic slowdown.
"MUCH SHARPER THAN EXPECTED": At 7.1 million, the number of unemployed is already over a million higher than the Economy Ministry forecasts for 2009 as a whole as companies slash jobs in the face of falling global and domestic demand and the inability to attract fresh financing.
The Federal Statistics Service did not give a monthly breakdown for the jobless data, but according to Reuters calculations, unemployment hit 11.9 percent in March from 8.5 percent in February, assuming previous data was unrevised. "Unemployment is coming up much sharper than I was expecting so I am considering revising my forecast of 12 percent for year-end," said Elina Ribakova, economist at Citi.
Retail sales fell for the second consecutive month year-on-year in March, after slipping into the red for the first time since September 1999 in February. One glimmer of hope came from housing starts, which recovered sharply from a one-year low in February, traditionally the worst month for the sector. A presidential advisor on Monday forecast that the economy could start to recover in six months' time, once demand picks up in China and other countries.
"We are an export-oriented economy. The drivers of growth, the variables are outside of Russia, which makes it dependent on the global situation more than others," Igor Yurgens, chairman of the Institute of Contemporary Development, told Reuters financial television in an interview.
Even before the data was released, Russian markets staged a retreat on Monday after weeks of gains. Russia's Urals oil export blend fell nearly $3 to 47.75 a barrel, the MICEX stocks index lost 4 percent and the rouble retreated from three-month highs versus a euro-dollar basket.
Comments
Comments are closed.