Zee Beam News

06.23.09 - Associated Press by Catrina Stewart - MOSCOW. Russia's economic downturn showed no signs of slowing in May, with preliminary figures released Tuesday revealing an 11 percent annual contraction in the economy during the month. The slide in gross domestic product was worse than the 10.5 percent annual drop in April. During the first five months of the year, the economy shrank by 10.2 percent compared with last year, Deputy Economy Minister Andrei Klepach said. Russia has been the hardest hit of the major developing economies as oil prices plunged last year and demand for metals dropped off. It is widely expected that second quarter GDP figures will show the economy is in a technical recession - often defined as two consecutive quarters of negative growth. Growing fears over Russia's dependency on the oil price and the specter of rising bad loans in the banking sector have spooked investors, who had helped drive Russia's growth in the oil-fueled boom years under Vladimir Putin's eight-year presidency that ended in 2008. Klepach said that a hoped-for recovery had been thwarted by plunging investment, and warned it would be a "heroic achievement" if Russia posted a GDP decline this year of about 6 to 8 percent - roughly in line with official forecasts. "The economy is close to the lowest point of its contraction," Klepach said, according to the Interfax news agency. "In several sectors close to the global situation, a revival has been seen and exports can be expected to grow, but the sectors tied to investment demand are showing a major decline."