Russian economy 'stagnating'

However, though saying stagnation was "probably an appropriate term" in an interview with Kommersant daily, Economic Development Minister Alexei Ulyukayev denied the economy was in recession. "There is no recession. And there will not be one," he told Kommersant in his first interview since he took the job as minister in June. Latest figures from the State Statistics Service estimated the economy grew 1.2 percent in the second quarter of 2013, the sixth back-to-back quarter of falling growth and the worst since the 2009 recession. Ulyukayev listed institutional, structural and macroeconomic factors as major causes of the disappointing growth rate, and high level of social spending as an underlying reason. As a middle income country, Russia was burdened with heavier social obligations than it should have taken on, Ulyukayev said, adding the high spending was caused by certain conditions that could not be scrapped. In April, the Economic Development Ministry lowered its 2013 forecast for the country's GDP growth this year to 2.4 percent from 3.6 percent amid stagnant exports and faltering investment. In 2012, Russia's GDP grew only 3.4 percent, the lowest rate since the recession of 2009. Prime Minister Dmitry Medvedev told a government meeting last month that Russia's unsatisfactory economic growth this year was partly due to the government's failure to improve economic competitiveness. President Vladimir Putin has said economic growth efforts should focus mainly on raising productivity, increasing investment and boosting innovation.