Russia heading for a potential recession

With the United States and the European Union mired in economic malaise and China's manufacturing growth beginning to slow, many investors have looked to Russia as a source of revenue with its pro-business policies and rich stores of ore and precious minerals. However, recent statements from senior government officials suggest that Russia may be headed for a recession.

Andrei Belousov, the Eurasian nation's Economy Minister, released an updated economic forecast on April 11. He spoke with reporters regarding the developments the next day, hinting that Russia could experience slower growth. The nation's GDP is expected to increase by 2.4 percent for the year, down from 3.6 percent, although official data from the Kremlin suggests that first-quarter growth was approximately 1 percent.

"We are not in recession for now, but we may get there – there is such a risk," Belousov said. "I think that, if by autumn we don't see growth for some period, we may slide into recession."

The government minister went on to suggest that economic stimulus, including infrastructure spending and tax cuts, could provide an extra layer of support for Russia's flagging economy. 

Outside observers, reported The India Times, suggested that weakening export figures and falling investment levels are at least partially to blame. There may also be concerns among global investors that a new rule – which pegs spending to oil price averages – could make government finances more inflexible during future crises.

It's unclear whether Russia will enter recession before the year's end. However, with economic growth floundering elsewhere around the world, it's not unrealistic to think that problems could crop up. Investors with exposure to Russia may want to keep an eye on their portfolios and consider buying up stable, income-generating assets like cash flow real estate. To learn more, download a "Free Game Plan Report" today.