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Russian Economic Contraction 4.2% in June

Official figures show that Russian economic contraction for June compared with the same period last year was 4.2%. 

The year on year figure for May was significantly worse at 4.8%. Additionally, month on month contraction was 0.1% suggesting an upturn might be around the corner.

Deputy finance minister, Maxim Oreshkin told Bloomberg that fourth quarter contraction is likely to be 3.5%.

Russia’s economy has had a tough year with Western led sanctions and a fall in the price of oil leading to a currency collapse not seen since 1998. Spiralling inflation is also hitting real wages to ordinary Russians.

Reduced imports due to lower spending power and sanctions on European food imports has also sent shock waves through many industries in Europe.

In Russia, inward investment has plummeted, its construction sector is suffering badly and retail sales have been hard hit. However, unemployment has not been badly affected and has actually been falling since March. Currently it stands at 5.4%, according to Trading Economics.

The performance of the Russian economy is still closely tied to the price of oil. The economy minister believes it can stave of recession next year if the the price of oil remains above $60 a barrel.

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