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Russian Economy Sees First Contraction Since 2009

Russia's government has announced the country's economy contracted last month, the first such contraction since October 2009.

The Economy Ministry said on December 29 the economy shrank 0.5 percent in November. The government earlier predicted GDP will fall by 4 percent in 2015.

The slump comes as global energy prices continue to fall, with oil prices having decreased by 50 percent since June. The Russian economy is heavily dependent on exports of oil and natural gas.

In addition, Russia's national currency has come under pressure as a result of Western sanctions against Moscow over the conflict in Ukraine. Those sanctions have reduced the ability of Russian companies to secure financing to make payments on their Western debts.

The weak ruble is also spurring inflation, which the Russian government says could run at more than 10 percent next year.

The ruble briefly fell to 59 to the dollar following the government's statement after closing at 54 on December 26. It recovered to 56 in afternoon trading.

Based on reporting by Reuters and AFP

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