Russia enters the global recession

The latest report from the World Bank deals with Russia and forecasts how it's economy will fare in the near future. The World Bank says that the Russian economy will recede on 2009. The news of the report sent the stock markets in Russia falling as well as a drop in the value of the ruble.

From the story in the New York Times writer Ellen Barry tells us how this will impact the poor in Russia.

The World Bank released a grim report on Russia on Monday, projecting a 4.5 percent contraction in the economy in 2009 and warning that the financial crisis would push 5.8 million Russians into poverty unless the government shifted more spending to poor families.

The report was a sharp revision of the World Bank’s November forecast, which predicted an increase of 3 percent in gross domestic product in 2009. World Bank analysts also took a more pessimistic view than the Russian government, whose experts are predicting a 2.2 percent contraction.
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The World Bank report addresses a particular worry of Russian authorities: that unemployment will translate into civil unrest. Already, nearly 6.4 million Russians are unemployed and 1.1 million are on forced leave or working part-time schedules.

By the end of 2009, unemployment will probably reach 12 percent, the World Bank predicts. The poverty rate will climb to 15.5 percent, erasing some of the gains made in the last decade, when poverty fell to 10 percent from about 20 percent, the report said.

The report recommends a package of payments, including increases of 70 percent in unemployment subsidies and 220 percent in child welfare payments, which Mr. Bogetic said “could alleviate some of this social pain.”

“These instruments are better than all the others in reaching the poor,” he said. “You need to jack them up sufficiently.”