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Russian economy nears recession

The growth rate was downgraded, and the projected rate of inflation rose.
By Ed Adamczyk Follow @adamczyk_ed Contact the Author   |   Aug. 27, 2014 at 3:35 PM

MOSCOW, Aug. 27 (UPI) -- The Russian economy is nearing a recession, an Economic Ministry official said, the result of Western sanctions and a ban on food imports.

Oleg Zasov, the ministry's head of forecasting, called the situation "close to recession" Tuesday. Russia's growth forecast, announced Tuesday, was cut from two percent to one percent, and its inflation forecast was raised to 7.5 percent from 6 percent.

Russia's economy grew by 1.3 percent in 2013. Price increases of about two percent, typical in the United States, are regarded by economists as normal and healthy.

Predictions have been downgraded since Western countries imposed sanctions in July for Russia's support of separatist rebels in Ukraine.

Deputy Economic Minister Alexei Vedev said a 2015 sales tax in Russia could add another one percent to its inflation rate.

Falling oil prices have also hurt Russia, a large exporter of oil. The price of benchmark Urals oil fell to $98 per barrel this week, down from $115 per barrel last week.

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