Russian economic woes spreading beyond borders

Five straight quarters of economic decline in oil-rich Russia are starting to have a spillover effect on the economies of its neighbors, a data review finds.

A review by the U.S. Energy Information Administration of U.N. and World Bank data finds contraction in Russia is spreading beyond its vast border. About 8 percent of the people living in Russia are foreign-born and, with the Russian economy in decline, remittances are lower as well.

"In some developing countries, remittances are a significant source of purchasing power," the EIA's report read. "Under such circumstances, slower growth or outright declines in remittances can negatively affect the economies of countries dependent on them and, in turn, potentially slow their oil consumption growth."

From Central Asia to Eastern Europe, EIA reports seven countries sharing a border with Russia all received at least half of all remittances from Russia and that contribution is down, on average, by about 26 percent, or $800 million.

EIA attributes the decline to the dual strains of lower crude oil prices and sanctions imposed because of Russia's policies on Ukraine, a former Soviet Republic. According to the World Bank, the economy in Ukraine, one of those countries relying on remittances, reported a 9.9 percent decline last year.

The Central Bank of Russia cut its key interest rate by a half percent to 10.5 percent per year, adding economic growth was imminent as inflation moved toward the target rate of 4 percent by late 2017.

The World Bank has said downside risks for the economies of Europe and Central Asia remain because of Russian weakness. Russia, however, is one of the few major oil-based economies expected to produce more oil this year.