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Russian industrial output dips in Nov
(Agencies)
Updated: 2008-12-17 08:09

Russian industrial production shrank the most since the economic collapse of 1998 in November as the global slowdown reduced demand for steel, pipes and fertilizers, pushing the nation to the brink of recession.

Output contracted 8.7 percent after growing 0.6 percent in October, the Moscow-based Federal Statistics Service said yesterday. Production shrank for the first time since new methodology was introduced in 2003 and the biggest decline since 1998, when the government defaulted on $40 billion in debt.

Russia is not in recession "yet" and the economy will grow by as much as 3 percent next year, Finance Minister Alexei Kudrin said. Barclay's Capital said on Dec 10 that the economy will sink into recession next year, as eight years of growth averaging above 7 percent comes to a halt.

"This was triggered by the production cuts in the steel sector and this affected other, related areas: steel products and mining," Vladimir Osakovsky, chief economist at UniCredit Bank, said before the official data release. The Interfax news service reported the same numbers on Monday, citing an unidentified government official.

The global financial crisis has shattered the economic growth outlook for emerging markets and global trade will go into reverse for the first time in 25 years next year, the World Bank predicted on Dec 9. The contraction was almost five times sharper than the median forecast of 12 economists surveyed by Bloomberg for a drop of 1.8 percent. Production fell a monthly 10.8 percent compared with growth of 2.8 percent in the previous month.

"In conditions of a global economic crisis, this systemic contraction in demand will, of course, affect Russia," Kudrin said on Monday.