ST. PETERSBURG (Bloomberg) -- Russia’s economy may shrink between 8 percent and 8.5 percent this year after companies depleted stockpiles and exports plummeted during the global slowdown, the Economy Ministry said.

Gross domestic product probably contracted 10.2 percent in the first six months and may slump 6.8 percent in the second half, the Moscow-based ministry said in its draft economic forecast for the next three years, which will be discussed at the government’s meeting today.
“The drop in external demand remains one of the reasons for the intensive decline,” the report said. The economy will start recovering in the second half as exports increase, companies begin replenishing inventories and consumer demand stabilizes, according to the report on the government Web site.
Economy Minister Elvira Nabiullina predicted a contraction of as much as 8 percent in May, revising her ministry’s earlier prediction for a 2.2 percent slump this year. The world’s biggest energy supplier is sliding into its first recession in a decade after the worst global financial crisis since the Great Depression sapped demand for Russia’s oil and natural gas and investors fled emerging markets during the credit crisis.
Exports tumbled 47.4 percent through May on falling prices for oil and raw materials, the ministry said in the report.
Investment, output
Capital investment may slide 21 percent this year as power generators and energy companies, which account for about a third of total investment, cut spending programs, the report said. The ministry predicts oil prices will average $54 a barrel in 2009.
Industrial production may shrink between 11 percent and 13 percent as manufacturing slumps as much as 17 percent in 2009, the ministry said. Inflation will be between 12 percent and 12.5 percent in 2009, slowing from last year’s 13.3 percent.
The economy will benefit in the second half from the global recovery, the easing of fiscal and monetary policies and the government’s stimulus spending, according to the report.
The government has earmarked 2.51 billion rubles ($76 billion) in spending to battle the slump, including funding designated for carmakers, agriculture and construction. The “anti-crisis” program was signed by Putin on June 19.
Retail sales may show quarterly growth during the last three months of the year, the ministry said, predicting an annual contraction of 5.8 percent in 2009.
The companies’ stockpiles probably reached the bottom in the second quarter. Industrial output will begin to expand as inventories are rebuilt, easing the slump in the second half, according to the report.
The forecast proposed as the basis for developing the budget between 2010 and 2012 predicts a 1 percent expansion next year, followed by 2.6 percent in 2011 and 3.8 percent in 2012.
The so-called “moderately optimistic scenario” expects a deficit of 6.5 percent in 2010, followed by budget shortfalls of 4 percent and 3 percent in the next two years.