Russia Faces 15 Billion Dollar Heatwave Losses

Russia is starting to count the losses of the worst heatwave in its history, with economists warning the weather may cost the country up to 15 billion dollars and undercut a modest economic revival. While it may take months for the government to tally the damage caused, several economists said the disaster might cost Russia between 0.5 percent and 1.0 percent of this year's gross domestic product (GDP), or roughly 7-15 billion dollars. Alexander Morozov, chief economist for HSBC bank in Russia, said the abnormal heatwave, including a severe drought, forest fires and smog, will be a significant factor eroding growth as Russia recovers from the economic crisis. "Economic growth in Russia is slowing and the heatwave will lead to a further slowdown," Morozov told AFP, estimating the immediate losses from the fires and the smog at 1.0 percent of this year's GDP, or around 15 billion dollars. That number covers immediate losses in the agriculture, industrial and services sectors and does not take into account any indirect losses that would stem from a spike in deaths and illnesses, he said. The International Monetary Fund said this month that a recovery in Russia from deep recession remained fragile but appeared to be gaining momentum, putting this year's growth at 4.25 percent and 2011 at 4.0 percent. The Russian economy contracted a very sharp 7.9 percent last year as key energy exports were hit by the global economic slump, sending the country into a painful reverse after years of buoyant expansion.