The International Monetary Fund said today that Russia is already in recession and slashed its growth forecast for 2014 citing the effect of the Ukraine crisis on investment.
"If we define recession as negative growth in two quarters in a row, then Russia from that point of view is experiencing recession," IMF economist Antonio Spilimbergo was quoted as saying by the Interfax news agency.
The IMF has lowered its 2014 growth forecast for Russia to 0.2% from the 1.3% figure it issued on April 8, Spilimbergo said.
"We have clarified our forecast on Russia's economic growth. We expect growth at the level of 0.2% this year," he said.
The IMF's decision came taking into account "the difficult current situation and the significant level of uncertainty related to geopolitical tensions and sanctions," Spilimbergo was quoted as saying in comments translated into Russian.
"This all has a very negative effect on the investment climate," he said.
"We expect that the fall in investments that already took place in 2013 will increase further this year."
Russia's economy contracted by about 0.5% in the first three months of the year compared with the previous quarter.
The finance ministry warned this month that the economy could tip into recession in the second quarter.
Finance Minister Anton Siluanov said this month that Russia could see growth of 0.5% in 2014 but warned growth could be only "around zero".
Standard and Poor's ratings agency on Friday downgraded Russia's ability to repay debt to BBB-, one notch above junk status, and retained its negative outlook.
Russia's economy has already seen colossal capital flight since the start of the Ukraine crisis as investors have pulled out their funds.
Spilimbergo said the IMF "expects capital outflows this year at a level of $100 billion," but that a "high degree of uncertainty" remained.
Russia's government has predicted capital outflows over 2014 of between $70 and $100 billion. Russia's central bank said that capital flight in the first quarter alone amounted to $50.6 billion.
Spilimbergo said the IMF was forecasting 1% growth in Russia in 2015, down from its previous forecast of 2.3%.