According to figures from the Russian Statistics Service, the Russian industrial production dropped 8,7 percent in November. In December, the situation is expected to aggravate with a 19 percent production drop, newspaper Kommersant reports.
“If the figures are not mistaken, Russia faces an industrial catastrophe worse than the one of 1998-1999”, the newspaper writes.
Similarly, prices on Russian industrial goods are falling with unprecedented speed. In November the prices dropped 8,4 percent after a six percent drop in October and a five percent drop in September. That is the quickest and most dramatic drop in industrial prices in Russian history, Kommersant reports.
Government reactions
Russian authorities now admit that the country is in deep crisis. Deputy Minister of Economic Development Andrey Klepach last week said Russian economy has ended up in recession. Finance Minister Sergey Kudrin has reviewed 2009 growth estimates downgrading forecasts to only a three percent growth, down from last year’s 8,1 percent. That figure is however an optimistic one. Others, like the Deutsche Bank, believes Russian economy will grow no more than with one percent next year.
In a meeting with Central Asian leaders this week, Prime Minister Putin himself express concern about the situation, saying that especially the rising unemployment is worrisome. In October, official Russian unemployment rose to 4,6 million people, newspaper Gazeta writes.
Focus on big industry
In a cabinet meeting today, Mr. Putin highlighted the need for government support to the country’s key industrial enterprises. He said that a few hundred enterprises account for as much as 85 percent of Russian GDP, a press release from the cabinet reads.
-These are companies with a turnover of 15-16 billion RUB each, with more than 4000 employees, these are local cornerstone companies, which employ more than 30 percent of the local populations in working age, he said, underlining that the state must give priority to these companies.
Foreign trade
Also Russian imports and export are suffering from the economic downturn. According to figures from the Federal Customs Service, imports from abroad (not including the former Soviet states) in November dropped 19,9 percent from October. The value of the November export totalled 17,3 billion USD, which is down 2,3 percent year-on-year.
Meanwhile, the country’s growth in exports stagnated to 11,9 percent year-on-year, compares with a 53 percent growth year-on-year growth for the period January-September, Vedomosti reports.
Housing
Another sector of the Russian economy which is feeling the rapid consequences of the downturn is the construction industry. A major number of companies are unable to complete started projects, and new projects are put on hold. In 2009, housing construction in Russia is predicted a 15 percent drop, Vedomosti reports.
In 2008, a total of 52 million square meters of new housing was built of which about half was private houses. That figure is about the same as for 2007, the newspaper writes.
