Russia's industrial output slumps

Russia's economy is reliant on oil and metals

Russian industrial output dropped 10.8% during November, fuelling fears that the economy faces a recession.

The figures from the statistics office also showed that industrial output was down 8.7% compared with November 2007.

Despite the latest weak economic figures, Russia's finance minister Alexei Kudrin said on Monday that the country was "not in recession yet".

Last week, Russia's deputy economy minister, Andrei Klepach, had said the economy was heading for a recession.

Asked whether Russia would have a recession, Mr Klepach had said: "It's started already. I'm afraid it will not be over in the next two quarters."

Russia is heading for its first recession since the 1998 crisis Capital Economics

Recessions are normally declared after two successive quarters of negative growth.

The worst falls in November were recorded in the metals and chemical sectors and in the production of building materials.

"While there had previously been some initial indications from the economic development ministry that industrial growth deteriorated dramatically, we still view the actual numbers as very negative," Alfa Bank economists said.

Economy 'to stagnate'

On Monday, Mr Kudrin had said that "we expect positive growth next year, up to 3%".

But many economists predict that the Russian economy will not perform as well as the minister forecasts.

"A combination of falling oil prices, weaker external demand, frozen credit markets and much softer real incomes growth means that we now expect the Russian economy to stagnate in 2009," London-based consultancy Capital Economics said.

"What's more, this is likely to encompass at least two successive quarters of negative growth, meaning that Russia is heading for its first recession since the 1998 crisis," it added.

Russia - reliant on metals and oil - has been hit by tumbling oil prices and falling demand for commodities

Its economy grew by 8.1% in 2007, helped by soaring oil and metals prices.

The price of oil hit a high of $147 a barrel earlier this year, but it is now languishing at about $50 a barrel.

Russia's stock markets have plunged in recent months and the central bank has spent billions of dollars trying to support the rouble.