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. Last Updated: 07/27/2016

2nd Wave Of Crisis Seen in ’10

MTA taxi in front of a sign reading, “A strike against the crisis” on Thursday.

The economy will likely take first steps toward recovery in the third quarter, but the start of 2010 will bring the risk of a second wave of economic crisis, Deputy Economic Development Minister Andrei Klepach said Thursday.

Klepach, speaking ahead of the official release of the Economic Ministry’s monthly economic review, said the contraction of gross domestic product eased to 9.6 percent year on year in June compared to a slump of 11 percent in May.

“The crisis, or the economy, is close to the bottom, which supports our argument … that the third quarter will be better than the second, though in year-on-year terms it will still be a minus,” Klepach told a news conference.

“There are risks of a second wave of the slowdown, of the situation worsening at the start of next year due to companies’ solvency and the situation in the banking sector. … But we reckon that it can be avoided,” he added.

He also forecast unemployment — which peaked in February according to revised official data — will rise again before the end of the year. The Federal Employment Service expects a jobless spike in September caused by the end of seasonal work and the arrival of new graduates.

Klepach, the ministry’s chief macroeconomic forecaster, estimated July consumer price index inflation at 0.5 percent to 0.6 percent, similar to June.

He does not expect deflation in August, however — something officials had been hoping for as they look to easing inflationary pressures to leave scope for the Central Bank to keep cutting interest rates and stimulate the economy.

President Dmitry Medvedev said Thursday that he expected inflation to fall to below 10 percent to 11 percent in 2009 compared with 13.3 percent last year. The Economic Development Ministry’s forecast for this year is 12 percent, but Klepach said this could yet be tweaked before the prognosis is put before the government in September.

Medvedev said annual inflation should be “driven” down further to 4 percent to 6 percent in the future.