Russia's economic outlook darkened on Tuesday, with a government forecast for a 2.2% contraction adding to a batch of gloomy data releases to put pressure on the ruble and stocks.
Prime Minister Vladimir Putin said Russia would run a budget deficit in 2009 to support its creaking economy and spending plans. Wage arrears - a cause of social unrest in the 1990s - jumped nearly 50 percent last month, affecting half a million people, and officials said they would even cut spending on hosting the 2014 Winter Olympics, previously seen as sacred.
The previous day brought news of a record slump in industrial output in January as companies idled factories and cut working weeks in the face of slumping demand. The Economy Ministry responded by slashing its outlook for the once-buoyant economy, despite keeping unchanged its oil price forecast of $41 per barrel for 2009 and a currency exchange rate assumption of 35.2 ruble per dollar. “The GDP forecast has worsened to minus 2.2% (from minus 0.2%),” Interfax news agency quoted Deputy Economy Minister Andrei Klepach as saying on Tuesday.