Russian Economy Shrinks In First Quarter

Russia's economy has had its first contraction in nearly six years following a sharp slide in energy prices and the ruble's worst crisis since 1998.

Citing preliminary data, the Federal Statistics Service said on May 15 that gross domestic product declined 1.9 percent in the first quarter year-on-year, following a 0.4 percent gain in the previous three months.

Growth stalled in 2014 because of Western sanctions over the Ukraine crisis and a plunge in oil prices.

The government officially forecasts a 3 percent contraction of the economy this year, but officials have said that this now looks over-pessimistic.

In a sign of growing confidence about Russia's economic outlook, the central bank sold rubles this week for the first time since June 2014 in an effort to rebuild its foreign currency reserves.

The move comes as the national currency rebounded more than 20 percent this year amid a jump in oil prices and as a cease-fire agreement in eastern Ukraine reduced the likelihood that sanctions against Russia will be deepened.

Based on reporting by Reuters and Bloomberg.com