According to VTB reports, the decline in Russia’s gross domestic product began to slow down compared to the sharp drop in December of last year.

VTB bases its assessment of the GDP on industry and service activity in the country. While evidencing the slowing-down of the pace of economic decline, April’s change in the GDP figure is still one of the worst results of Russian economy’s performance in the past decade. For 11 months prior to April, the monthly decline of Russia’s GDP was higher than the figure for each preceding month. In April, the GDP fell by 4.7 percent, while in March it dropped by 5.4 percent.      

Other measurements VTB sets to assess the standing of Russia’s industrial and service sectors similarly showed signs of improvement in April. The volume of manufactured goods that were not sold through retail was down; the number of jobs lost decreased; and the number of orders in the service sectors did not decline as dramatically as before.

VTB was the first banking institution to alert the beginning of difficult times for Russia’s economy. Its forecast for December of 2008 indicated that the GDP would be diminished by more than 1 percent on annual basis. The number has subsequently been revised. Russia’s Ministry of Economic Development later reported that the December GDP demonstrated a 2.2 percent decline in annual terms. 

The Ministry of Economic Development has hopes for the country’s economy to demonstrate substantial improvements in the second half of 2009. Even during the second quarter of the year, according to Ministry’s assessment, the GDP should rise by 1.3 percent to 2.8 percent in relation to the results for the first quarter. 

Market analysts believe that the lowest point of the crisis has passed, and that companies in Russia learned to deal with the new economic reality. Even though it is not possible to say that a full-scale recovery began, the situation appears to have been stabilized.

Other experts suggest that the transition was brought about by the realization on the part of company’s executives that the decline in demand is inevitable. Objectively analyzing the economic conditions and trying to cut costs in all possible ways allowed companies to minimize their losses.

The currency market also became steady in April. The volume of money in circulation within Russia’s economy increased, bank-to-bank loan rates dropped, inflation decreased, and the Central Bank reduced the rate for refinancing. The decline of Russia’s foreign currency reserves stopped. The number of people without employment did not increase at the same steep rate as it did in the previous months.

At the same time, almost all economic estimates of Russia’s performance in 2009 were revised in April. The IMF, the World Bank, and the Ministry of Economic Development forecast that Russia’s GDP will drop by 6 percent in 2009. 

In the view of Russian economists, it was not possible to estimate the proportions of the crisis at the beginning of 2009, since no exact forecast can be made in the absence of detailed statistics. Even now, a number of experts do not agree with official figures.

According to Merrill Lynch predictions, consumption in 2009 will drop by 2.1 percent, resulting in the fall of Russia’s GDP by 2.2 percent. Meanwhile, the Ministry of Economic Development expects consumer demand downturn to speed up from -1.1 percent in the first quarter to -4.9 percent by the end of the year. From a socioeconomic perspective, the lowest point of the recession might not pass until the end of 2009 if unemployment remains at 10 percent.