Russia economy contracts for first time in five years
Russia’s economy has contracted for the first time in five years amid falling oil prices and Western sanctions.
The Russian Economy Ministry said the gross domestic product (GDP) for November shrank by 0.5 percent year-on-year for the first time since October 2009.
It put the negative growth down to a slowdown in sectors including services, agriculture, extraction of mineral resources, and construction.
“This is the beginning of a recession,” said Ruslan Grinberg, director of the Institute for International Economic and Political Studies at the Russian Academy of Sciences.
On Friday, Russian Finance Minister Anton Siluanov said the economy could contract by four percent and that its budget could have a deficit of over three percent of the GDP next year amid falling oil prices.
Siluanov said on Friday that his ministry has taken measures to redraw the budget forecasts in light of oil prices hovering around USD 60 a barrel, expecting the average exchange rate of the Russian currency, ruble, to be around 51 rubles per dollar in 2015.
Russia has been hit with a series of sanctions by the US and the European Union, which have accused Moscow of playing a role in the ongoing crisis in eastern Ukraine, a claim Russia has repeatedly rejected.
The country has been witnessing a decline in the value of its currency, which is going through its worst crisis since 1998 due to Western bans, dropping oil prices, and trader fears.
