Russian economy hit by drop in energy prices


The Russian economy, which is heavily dependant on oil exports, is forecasted to contract by 7.5% in 2009, according to President Dmitry Medvedev.

The latest official figures suggest that the Russian economy declined 10.2% in the year to August, compared with the same period a year earlier.

The economy has been hit hard by the sharp fall in energy prices and according to the Federal Customs Service, energy including oil and natural gas, accounted for more than two-thirds of exports to countries outside the former Soviet Union and the Baltic states in the first seven months of the year.

However, the economy is forecast to exit recession in the third quarter. Major economies such as Germany, France, Hong Kong and Singapore all exited recession in the second quarter after experiencing positive growth.

Meanwhile, Mr Medvedev told Russian television that: “The real damage to our economy was far greater than anything predicted by ourselves, the World Bank and other expert organisations.”

However, measures introduced to protect jobs and stabilise the country’s banking sector had been successful.

Meanwhile, the central bank has slashed interest rates seven times since April, bringing rates to a level of 10%.

Finally, unemployment remains high in the country with the rate currently standing at 7.8%, taking the number of unemployed to 6 million, according to the Federal Statistics Service.

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