Russia’s GDP is contracting in November, a first since 2009 – Challenges.fr

Russia's GDP is contracting in November, a first since 2009 – Challenges.fr

* Contraction of 0.5% in November, the government announced

* Economists see the movement amplify

* Moscow expects a decline of 4% of GDP in 2015

* The ruble resumed its slide in sparsely furnished exchanges

Elena Fabrichnaya and Alexander Winning

MOSCOW, December 29 (Reuters) – The economy Russian shrank in November for the first time since the global financial crisis, under the impact of Western sanctions and falling oil prices, according to data released Monday by the Ministry of Economy.

The 0.5% decline in gross domestic product (GDP) is the first since October 2009, and economists expect that the movement is growing because of the dependence of the Russian economy on oil.

The crude during the slump has accelerated in December after the refusal of OPEC to cut production and are now down nearly 50% from their peaks last month June To this are added the Western sanctions imposed because of the Ukrainian crisis, which resulted in capital flight of more than $ 100 billion this year.

“With the current level of oil prices it is expected that the situation worsens again. There is no reason for optimism, “said Dmitry Polevoy, economist at ING Bank in Moscow. “This is due to oil but also sanctions and the movement of panic we had on the markets in December. It will take time to repair the damage to the banking system and consumer confidence.”

THE RUBLE RELAPSE

The sanctions have greatly reduced the borrowing capacity of Russian companies and banks abroad, triggering the worst crisis of the ruble since the country has failed on its debt in 1998.

After some recovery Friday, the Russian currency opened down more than 6% against the dollar and the euro on Monday in small volumes before to erase some of its losses.

The depreciation of some 40% of the ruble since the beginning of the year adds the import prices and thereby cause higher inflation which could undermine the popularity of President Vladimir Putin.

The government does not rule out a contraction of 4% of GDP next year if crude oil prices remain at the current level with inflation which could exceed 10%.

To stop the fall of the ruble, which in December lost up to half of its value, the government introduced informal exchange control measures and the central bank sharply raised interest rates.

The government has ordered two parallel major exporters, Gazprom and Rosneft, to convert rubles a portion of their dollars in revenue to support the currency .

The Russians keep a cautious eye on the exchange rate of the ruble since the hyperinflation of the early 1990s that made them lose their savings before a new currency collapse in 1998.

In the morning, the Russian currency was trading at 55.25 to the dollar, well below its level of 30-35 in the first half but well above its low of 80 for a dollar hit in mid-December.

The fall of the ruble led to a frenzy of foreign currency purchases and parallel bank runs that have dramatically increased the pressure on the Russian banking sector already weakened by Western sanctions.

The central bank Friday announced its intention to provide a loan of 99 billion rubles (1.6 billion euros) to a medium-sized bank, Trust Bank to avoid a first bankruptcy in the sector

Graphics on the Russian economy, the ruble and oil prices. http://link.reuters.com/nep63w ( Veronique Tison for the French service, edited by Bertrand Boucey)))