Russia’s GDP contracts for the first time since 2009

<p>The country’s economy is expected to enter recession in 2015.</p>

The Russian economy contracted by 0.5 per cent in November, according to official figures, representing the country's first fall in gross domestic product (GDP) since October 2009.

The government expects a 0.8 per cent decline in GDP next year, compared with 0.6 per cent GDP growth in 2014 as a whole, the BBC reports.

The Russian ministry for economic development said the manufacturing, construction, agriculture and service sectors all contracted in November.

The BBC also reports President Vladimir Putin signed a law today (December 29th) doubling the deposit guarantee for bank accounts, to 1.4 million roubles (£16,290), and has given the Russian central bank the power to recapitalise the country's biggest retail bank, Sberbank, directly with soft loans.

The nation's currency has fallen considerably since the turn of the year, with Western sanctions and declining oil prices biting hard. The rouble fell more than six per cent today to a rate of 57 to the dollar.

Russia's central bank announced a huge increase in interest rates earlier this month, introducing a hike from 6.5 per cent to 17 per cent. This decision was unable to halt the sliding rouble and it has meant that the country must now look at other options to help stabilise the currency.

Prime minister Dmitry Medvedev has already ruled out the introduction of capital controls, where money is restricted from moving out of the country, which is regarded as a last resort for struggling nations.

Russia relies heavily on revenues from oil exports but has been hampered significantly as prices have slumped. Production levels are not set to change after members of the Organization of Petroleum Exporting Countries voted against an output cut.

Find up to date information on the FTSE 100 and spread betting strategies at City Index

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.