Russia"s economy sees its largest contraction in history

Russia"s economy saw in 2009 its largest drop in recent history, as the country relies heavily on exporting oil, the price of which dropped 77% from its 2008 peak.

Last year, Russia"s GDP dropped 7.9%, after rising 5.6% in 2008, the Russian Federal Statistics Service announced yesterday in Moscow. Economists were expecting a larger drop: -8.5%.

Russian president Dmitri Medvedev said 2009 was "the hardest year" since 1998, when Russia entered bankruptcy. Banks are refusing to lend, and companies are being forced to restructure their debt because of the industrial dropping for 18 months in a row.

Russia"s economy was strongly affected by the drop in the price of Russian crude Ural, from USD 143 in July 2008 to USD32 in December 2008.

Russia"s unemployment rate increased unexpectedly in December 2009, reaching its highest levels in the last six months, which shows just how fragile its recovery is. The number of unemployed Russians increased to 6.2 million in December,- the highest level since July, however coming out below the February"s record of 7.1 million.

According to official data, household spending contracted by 8.1% last year, and net exports increased 58%. Fixed capital investments decreased 18.2%.

Russia will see an economic growth of 3.1% in 2010, baring any unforeseen changes in the economic environment, the Russian ministry of Economic Development said. Besides, if the anti-crisis measures prove efficient, Russia"s economy has "the potential to return quickly to a growth rate of 5-6%", a report published by the Russian government on December 30, 2009 says.

Before 2009, Russia had experienced impressive growth: 5.6% in 2008, 8.1% in 2007 and 7.7% in 2006.