Russia’s economy could shrink close to 5% this year as a result of plunging oil prices, according to the European Bank for Reconstruction and Development (EBRD).
That’s a major downward revision from its September forecast of a 0.2% reduction.
Oil prices have more than halved since June. Earlier this week, Brent crude was trading just under $50 (£33) a barrel.
The EBRD’s latest forecast suggests the slump in global oil prices is hitting growth in energy exporters and other emerging nations “with close links to eastern European’s largest economy”.
It said Ukraine’s economy would also shrink 5% in 2015, on top of a 7.5% decline last year, warning the nation’s foreign exchange reserves were “dangerously low”.
However, the report added lower prices could benefit countries in Central and South-eastern Europe and the South and Eastern Mediterranean.
For energy importers in eastern Europe, the Caucasus and Central Asia, the oil price fall is “a mixed blessing”, the EBRD said,” as benefits are being outweighed by lower export demand and remittances from a weakened Russia”.