Russia’s economy is barely growing, inflation is rising fast, and capital is pouring out of the country, the Economy Ministry said yesterday, a sign that international tensions around Ukraine are already inflicting severe economic costs.

In February, Russia’s gross domestic product eked out growth of just 0.3 per cent year-on-year, up from a revised 0.1 per cent in January, Russia’s Deputy Economy Minister Andrei Klepach said.

Last year, the economy grew by just 1.3 per cent, far below initial forecasts, but there had been hopes that growth would rebound this year. Instead Russia’s economic performance is deteriorating further as the international tensions around Ukraine lead capital to flee Russia.

Klepach said that when seasonal and calendar factors are taken into account, February’s 0.3 per cent was “not bad” and “better than expected”.

But he added that “it’s too soon to talk about a turn-around in economic trends, about a recovery from stagnation.”

He said that the ministry anticipates GDP growth of “around zero” for the first quarter as a whole. That would make its 2.5 per cent growth forecast for 2014 challenging.

“There won’t be a recession, but there is a problem of stagnation: it’s length and depth. Unfortunately, the investment slump is continuing. I’m not ready to say how long it will continue,” Klepach said.

While Russia’s economic growth slows, inflation is shooting up. The economy ministry expects inflation to reach 6.9-7.0 per cent in March, up from 6.2 per cent in February. The sharp rise illustrates how a slumping rouble is feeding into higher import prices, as both Russians and foreigners scramble to get out of rouble investments.