Page last updated at 10:40 GMT, Sunday, 11 October 2009 11:40 UK

Russia economy 'to shrink 7.5%'

A gas pipeline from Russia
Oil is sharply lower than it was a year ago

Russia's economy will shrink by 7.5% in 2009, President Dmitry Medvedev has said - but claimed Kremlin intervention had prevented a worse decline.

Russia, which is heavily reliant on oil exports, has been hit by the sharp fall in energy prices.

Mr Medvedev said the decline was "very serious" and admitted the government had been surprised at how severely Russia had been hit by the crisis.

However the predicted slide in GDP was less than earlier predictions.

"The real damage to our economy was far greater than anything predicted by ourselves, the World Bank and other expert organisations," Mr Medvedev told Russian television.

But he said that measures to save jobs and stabilise the country's banking sector had paid off.

Investment worries

Mr Medvedev added that while the rouble had initially declined against the dollar in the first months of the crisis, the currency was now "entirely calm and stable".

The most recent official figures suggest that in the year to August, Russian GDP declined 10.2% compared with the same period in 2008.

But it is expected to come out of recession in the third quarter.

Mr Medvedev spoke of other challenges the country's economy faced - though was not specific about what these were.

However overseas investment in the country is being deterred by the perception that state-run firms bully or intimidate foreign companies into handing over control of their investments.

There is also widespread cynicism as to how much President Dmitry Medvedev is really in control, and whether power really lies with Prime Minister and former President Vladimir Putin.

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