"Considering the current economic policy (tight fiscal policy and stringent monetary policy) and a weak effect of National Projects, a technical recession may be seen in the economy as early as in 2019, instead of 2021 projected by the Economic Development Ministry," the document said.

MOSCOW, August 5. /TASS/. Russia’s economy may face a technical recession as early as this year due to the hard-line fiscal and monetary policy, according to a research note released by the Stolypin Growth Economic Institute, whose Supervisory Board is headed by business ombudsman Boris Titov, on Monday.

According to the estimates of Russia’s national statistics service Rosstat, GDP gained half a percent in Q1 2019 year-on-year. Rosstat has not yet provided Q2 and 1H statistics, though the Economic Development Ministry suggests economic growth in the country amounted to 0.7% in the first half of 2019 year-on-year, the note said.

Experts at the institute believe that the growth was only reported by large enterprises and the state sector as the analysis of the register of small and mid-sized enterprises (SMEs) demonstrates a decline in economic activity in Russia.

Particularly, the number of employees at SMEs dropped by 1.6% in 1H 2019 year-on-year, while the number of small and mid-sized businesses plunged by 7-8% year-on-year.

Many economists have damped their outlooks for Russia’s economic growth since June 2019. The Central Bank has downgraded its 2019 Russian GDP growth projection from 1.2-1.7% to 1-1.5%, while the International Monetary Fund and the World Bank have lowered Russia’s economic growth estimate to 1.2%.

National Projects and the increase in infrastructure investment account for the biggest part of the projected growth, though the budget of National Projects was only executed by one third in the first half of 2019, experts of the Growth Economic Institute noted. Moreover, the lowest indicators of budget funds’ application were seen in National Projects that could have demonstrated the biggest multiplier effect - ‘Labor efficiency and employment maintenance’ (budget executed by 17.7%), ‘Safe and high-quality roads’ (budget executed by 12.2%), ‘Digital economy’ (budget executed by 8.3%).