RTTNews - According to the World Bank's Russian Economic Report No. 19 released Wednesday, Russia's economy is expected to contract by 2.9% this year, leaving millions of people in poverty and upping the country's unemployment rate to 13%.
Zeljko Bogetic, the World Bank's lead economist for Russia, said contributing factors to the expected decline include the fact that the contraction in gross domestic product has been much larger than anticipated and the expectation that growth is unlikely to pick up this year.
Bogetic added that Russia's real GDP will return to pre-crisis levels only at end-2012, credit and capital inflows will be scarce, and it is hard to see oil prices returning to pre-crisis levels in the near term.
The sheer force of the downturn in the first half is going to determine the economic outcome for this year, Bogetic continued. The road to recovery - at the global level and in Russia - is likely to be slow.
The contraction, the World Bank warns, could leave about 17.4% of Russians below the poverty line. It could also cause the unemployment rate to rise from its current 10% to 13% by the end of the year.
Russia's real GDP, the World Bank said, is likely to contract to about 7.9% for 2009. The country's middle class is expected to shrink about 10%, from 55.6% to 51.2%.
The World Bank estimates that 12.1% of Russia's population lived below the poverty level before the economic crisis came about last year.
In this much more constrained international environment, Bogetic said, the importance of sound economic policies aimed at improved effectiveness of public expenditures, productivity growth, better investment climate, and diversification cannot be overemphasized.
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