The World Bank and the Organization for Economic Cooperation and Development revised down their forecasts for Russia's economic growth on Wednesday, citing a drop in global demand and a slow implementation of the government's anti-crisis plan.

The World Bank said the economy would shrink by 7.9 percent in 2009, a much sharper contraction than the 4.5 percent it forecast earlier. The OECD put the drop at 6.8 percent, compared with its March forecast of 5.6 percent.

"Given a much larger gross domestic product contraction in the first quarter of 2009 than anticipated, Russia's economy is likely to contract by 7.9 percent in 2009, despite higher oil prices assumed in the current forecast," the World Bank said in its quarterly country report.

The economy of the world's biggest energy exporter shrank an annual 9.8 percent in the first quarter, the most in 15 years. The economy could contract "even further" in the second quarter, the World Bank report said.

"A worsening global environment -- contracting global demand, falling commodities process and tightening of credit -- has accelerated Russia's economic downturn," the bank said.

Deputy Economy Minister Andrei Klepach said Tuesday that an economic contraction of 6 percent to 8 percent will be a "heroic achievement" for the government after the economy contracted an annual 11 percent in May, compared with 10.5 percent in April, Interfax reported.

"The delay in delivering fiscal stimulus aggravated the initial impact of the economic crisis," the OECD said in its report. "The budgeted increases in expenditure should now be implemented quickly, in particular for social protection and active labor market policies."

By the end of 2009, 17.4 percent of the population, or 24.6 million people, would be living beneath the subsistence level of $185 per month, nearly 5 percent more than before the crisis, the World Bank said. Unemployment may exceed 13 percent by the end of the year, compared with 9.9 percent in May.

Rising unemployment and falling wages will cut the nascent middle class by 10 percent, or 6.2 million people, to about 51 percent of the population.

The government's stimulus package earmarks 2.51 billion rubles ($80 million) to battle the slump, including funding designated for the auto industry, agriculture and construction. The World Bank said the effect of the stimulus would be seen in the second half.

The World Bank forecast Russia's jobless rate to rise to 13 percent by the end of this year, from its 9.9 percent May level, and projected that Russia would return to "moderate growth" of 2.5 percent in 2010 and 3.5 percent in both 2011 and 2012. It said the economic recovery would be "gradual and prolonged."

"The speed of the subsequent recovery in Russia will to a great extent depend on the revival of global demand and the global financial system," it said, adding that Russia would reach precrisis growth rates only at the end of the third quarter of 2012.

"We remain of the view that most of the adverse impact in Russia is concentrated in the first two quarters of 2009," the World Bank said.

(Reuters, Bloomberg)