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.
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