January 25, 2016 / 10:20 AM / 4 years ago

UPDATE 1-Russian economy contracts 3.7 percent in 2015, slump set to continue

* GDP falls 3.7 pct in 2015 - preliminary official data

* Retail sales slump by 15.3 pct y/y in Dec

* Capital investment down 8.7 pct y/y in Dec (Adds details and context, analyst comment)

MOSCOW, Jan 25 (Reuters) - Russia’s economy contracted by 3.7 percent in 2015, preliminary data showed on Monday, with a slew of activity indicators suggesting the slump is far from over.

Russia is struggling to dig itself out of recession at a time when the price of oil, its main export, has seen a renewed plunge and as concerns about the global economy intensify.

Last year’s 3.7 percent contraction was marginally better than a 3.8 percent decline predicted in a Reuters analysts’ poll in December. However, other economic indicators published by the state statistics service on Monday showed continuing heavy falls and a deterioration compared with previous months.

Retail sales were down 15.3 percent year-on-year in December, in line with forecasts, after falling 13.1 percent in November.

A larger-than-usual contraction was expected because of a temporary surge in retail sales in December 2014. However, the decline has now been in double digits for four consecutive months.

Capital investment was down 8.7 percent year-on-year, compared with a fall of 4.9 percent in November, reversing an improving trend in the latter part of 2015 that had suggested conditions facing producers were improving. Analysts had forecast a 5.1 percent decline in December.

Real wages fell by 10 percent, slightly better than a 10.4 percent fall the previous month but worse than analysts’ average forecast of a 9 percent decline.

William Jackson, senior emerging markets economist at Capital Economics, said the weak activity data for December was “worrying”, pointing towards a deterioration towards the end of the quarter.

“The data highlight that, while the worst of Russia’s crisis has now passed, the economy is still extremely weak,” he said.

“The latest fall in oil prices and drop in the rouble mean the likelihood of a second consecutive year of recession is rising.” (Reporting By Jason Bush and Alexander Winning; Editing by Toby Chopra)

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