26.02.09

Russia's economy is expected to contract in real terms in 2009 for the first time since the 1998-1999 crisis, U.S. ratings agency Standard & Poor's (S&P) said in a press release Monday, citing its new report on the Russian economy.

"Russia is hardly alone in the current downturn and it does benefit in some ways from being a less open economy," said Frank Gill, an S&P credit analyst, as quoted in the press release.

Russia's exports are likely to decline to one-quarter of the country's total output this year, compared to one-third in 2008, S&P said. The agency added, however, that in real terms the fall would be much smaller.

As Russia’s asset boom was smaller in comparison to Western European countries, falling housing and equity prices would have less of an effect on overall consumption, S&P said.

The agency also said that the ruble's depreciation was expected to stimulate import substitution and growth.

"That said, we believe that in order to become a less volatile and more diversified economy that can compete with the other BRICs, Russia will have to find a way to get the financial account consistently into surplus again so that investment activity recovers," Gill said. "The alternative is for Russia to return to type, remaining a boom and bust commodity platform with untapped depths."

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Source: Prime-Tass