Russia's economy is shriveling up, show statistics

By Elena Holodny

Russia's economy has contracted the most since 2009 following lower oil.
Russia's GDP shrank by 4.6 per cent in the second quarter from the same period last year, following a 2.2 per cent decline in the previous three months, according to the Federal Statistics Service in Moscow cited by Bloomberg's Anna Andrianova.

This was a greater contraction than expected: Analysts in a Bloomberg survey were forecasting a 4.5 per cent contraction, while Russia's Economy Ministry projected 4.4 per cent.

Russia's economy has been bruised over the past year, in part due to the double whammy of collapsing oil prices and sanctions over the conflict in Ukraine. Recently, oil prices started to fall once again, which is a worrying sign for a country that's heavily dependent on energy.

"Faltering oil prices have increased the risks for the expected economic improvement in the second half," UralSib Capital analyst Alexey Devyatov said in a report before the data release, according to Bloomberg. "Sharp swings in the ruble rate have hit consumer demand and capital investment."

US dollar versus Russian ruble, 1 month.

The ruble recently dropped below 64 rubles to the dollar for the first time since February. Currently, the Russian currency is trading at 64.17 per dollar.

The ruble's drop follows the recent oil plunge: both Brent and WTI have fallen roughly 20per cent over the last six weeks. Currently, Brent is trading around $48.92/barrel, while WTI is around $43.68/barrel.