If seasonal factors are not taken into account, production has been declining for three months in a row. A Government source said that output in certain sectors, including coking coal, paper pulp and machinery had fallen more than 30 percent in November 2008 as compared with November 2007. “Only sectors tied in with government contracts saw appreciable growth: the manufacture of locomotives and turbine generators,” the source said.

The official estimates of 1.9 percent growth in industrial production for 2008 indicate that December should be even worse. Output would need to fall 19 percent for the month to meet the yearly prognosis. In practical terms, this suggests that key sectors that have already seen heavy losses should brace for continued problems.

Figures released by Rosstat, Russia’s statistical agency, showed that the fall in production was historically significant. If the slowdown continues at the same pace in December, the fall in industrial production will be deeper than that felt in the 1998 financial crisis. The November 2008 figures correspond with falling output at the start of 1999, when the crisis was at its peak.

Ordinary Russians were also feeling the effects of the crisis, and public opinion polls showed a rising dissatisfaction in the measures taken by authorities. As the Vedomosti newspaper reported on December 15th, citing the Public Opinion Foundation (FOM), 39 percent of the country do not have faith in the country’s leadership.

The survey was conducted in 68 regions that encompass 91 percent of Russia’s population. 34 thousand respondents were questioned from November 14th to the 25th.

42 percent of participants thought that the economy was in crisis. 26 percent noted a worsened situation in their region, while 36 percent saw construction projects being stopped. 20 to 33 percent, depending on the social group, feared they may not be able to find a job, while 25-33 expected to be laid off in the near future. 37-43 percent expected problems at the workplace.

Of those questioned, 39 percent said they felt a stronger sense of protest and dissatisfaction with authorities. In regions with heavy industrial production, the number went to 54 percent.

Alexander Orlov, FOM’s president, said that disaffection was identical across social groups, and that it was targeted primarily at local authorities.

Regions were rated on their dissatisfaction with authorities, then divided into three groups: calm, medium, and alarming. The most alarming regions were the Republic of Tatarstan, and the Yaroslav, Kursk and Omsk oblasts (regions). Moscow and St. Petersburg are also in the “alarming” category.

Last week, the Ministry sent updated predictions to the Ministry of Finance, based on macroeconomic indicators from the current year to 2011. The data will be cross-checked and forwarded to the Government.

“The inflation prognosis for 2007 was also raised to 7.5-8 percent,” the source said.

Russia’s government has had trouble dealing with rising inflation, which has accelerated sharply since last fall.

According to Rosstat, Russia’s statistics agency, inflation has numbered 8.7 percent for the first half of 2008.

Gennady Kuranov, the director of the agency’s macroeconomic forecasting department, explained that the higher rate was connected directly with rising prices on foodstuffs, and especially grain. According to Kuranov, the expected inflation for 2009-2011 remains unchanged, ranging from 5 to 7 percent.

Other independent experts have a somewhat gloomier outlook, the Gazeta.ru online newspaper writes. Maria Kataranova, of the Economic Expert Group, predicts that consumer prices will rise by 10 percent in 2008. Igor Shibanov, the director of the Russian Development Bank’s conversion operations, expected inflation to reach 13 percent. In the opinion of Agvan Mikaelyan, the general director of the FinEkspertiza (Financial Expertise) LLC, the rate could reach 15 percent.

One deputy from the Russian State Duma believes that the new prognosis is self evident. Raisa Karmazina, who serves on the budget committee and hails from the Krasnoyarsk Krai, spoke with the Mayak radio station:

“The Government of the Russian Federation is currently working out a program of anti-inflationary measures, but maintaining it within limits in this year will not work for many reasons, including external ones. These include a rise in world foodstuffs prices, and a reformation of the energy system, which needs a transition period of three-four years, and of course, the world financial crisis, which influences us to a lesser degree than other countries, but still puts pressure on the economy.”