Russia PM estimates economy shrank by 2% in first quarter

Prime Minister Dmitry Medvedev said Tuesday that the Russian economy likely shrank by two percent in the first three months of the year due to sanctions pressure and low oil prices.

That would be the first quarterly contraction since 2009 if confirmed, and Medvedev warned lawmakers the situation could worsen further still, in contrast to President Vladimir Putin saying last week that the worst of the economic crisis had passed.

"Negative trends continue this year" following the crisis of the ruble national currency in late 2014, said Medvedev while presenting a government report to parliament.

"Between January and March, GDP went down about two percent."

Last year the Russian ruble collapsed, sending inflation into double digits. The Central Bank predicted that the economy could shrink by up to four percent in 2015 if oil remains around $50 per barrel.

Medvedev said that the crisis was brought on by Western sanctions imposed over Russia's annexation of Crimea.

Russia last March formally annexed Ukraine's Black Sea region after deploying special forces soldiers there and overseeing a controversial referendum that supported Moscow.

The decision to annex Crimea was "the only one possible, and we all... supported it, knowing the possible consequences," said the prime minister.

He said "in terms of intensity, the latest wave of sanctions could be the strongest" that the West had imposed on Moscow in either the Soviet or post-Soviet period.

"We should not have any illusions, these are not just short-term crisis events," he said.

"If sanctions intensify and oil prices stay at extremely low levels, we will be forced to work in a different economic reality."