The International Monetary Fund (IMF) says Russia is in recession with its economy suffering from massive capital outflows over the Ukraine crisis.
IMF economist Antonio Spilimbergo, the head of the IMF mission to Russia, made the remarks to reporters in Moscow on April 30.
"If we define recession as negative growth in two quarters in a row, then Russia from that point of view is experiencing recession," he said.
Spilimbergo said the IMF had cut its 2014 growth forecast for Russia from 1.3 percent to 0.2 percent and expects about $100 billion of funds to be sent out of the country during the year.
Silimbergo said international sanctions imposed against Russia due to the Ukraine crisis and Russia’s annexation of Crimea already are hurting the Russian economy.
"The difficult situation and especially the uncertainty surrounding the geopolitical situation and follow up of sanctions and escalation of sanctions are weighing very negatively on the investment climate," he said.
He added that "the fear of sanctions could be even more powerful than sanctions."
Although the IMF official said it was difficult to find reliable economic indicators because the events surrounding the Ukraine crisis are very recent, he said that "there is a lot of evidence that investment is taking a hit, and both in public companies and in private companies, and of course in foreign companies."
U.S. sanctions targeting Igor Sechin, the president of Russia's largest oil company, Rosneft, could complicate the operations of Western oil companies with important investments in Russia, such as BP and Exxon.
That means BP, Exxon and others can continue working with Rosneft, for now, to explore for and produce oil and natural gas.
But if the sanctions against Sechin are a prelude to tougher sanctions on Rosneft, Western oil companies could be forced to abandon or suspend their partnership and some very ambitious oil exploration plans.
Russian President Vladimir Putin warned on April 29 that Western companies could eventually risk being shut out of Russia's energy sector because of U.S. and EU sanctions.
Meanwhile, the European Union on April 29 released the names of 15 individuals who are being targeted by fresh sanctions due to their roles in the Ukraine crisis.
That list brings to 48 the total number of people whose assets in the EU have been frozen Brussels and who won't be allowed to travel within the bloc.
EU diplomats were due to meet again on April 30 to discuss the addition of more individuals and debate the possibility that Brussels could introduce so-called "Phase 3" sanctions on Russia.
Those would target areas such as energy, the banking sector, forestry products, high-tech equipment, and the trade in luxury goods.
Russian Deputy Foreign Minister Sergei Ryabkov has admitted the sanctions will negatively impact Russia's hi-tech enterprises and industries.
With reporting by Reuters, AFP, ITAR-TASS, and Interfax