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Russia's economy is in a pit, according to economists.

Battered by a combination of falling oil prices, the ruble devaluation and sanctions imposed following the Ukrainian conflict, Russia's economy contracted by 4.6 percent in the second quarter compared with a year earlier, according to the country's statistics office. After a decline of 2.2 percent in the previous quarter, this marks Russia's deepest recession since the 2008-2009 financial crisis.

"Dreadful numbers out of Russia – and little sign of any recovery any time soon," Timothy Ash, analyst at Nomura, said in a research note. He added that consensus forecasts for Russian growth in 2015 would now be revised down to a 4 percent contraction.

President of the Russian Federation Vladimir Putin.
Getty Images
President of the Russian Federation Vladimir Putin.

Russians are set to see their incomes shrink in 2015 as a result of rampant inflation—one of the most important factors behind the country's economic straits. Real incomes also dropped in 2014, for the first time during President Vladimir Putin's 15 years in power.

More recently, sales of new cars, an important barometer of consumer confidence, fell by 27.5 percent in July, according to the Association of European Business Automobile Manufacturers Committee.

As a result of the recession, the Central Bank of Russia may need to take even firmer action to target inflation and help the recovery of real incomes and consumption. In July, the central bank cut its key interest rate by a further 50 basis points.

One recent economic bright spot came from gas exports by Russian state-backed gas company Gazprom to Western Europe. These rose by 22 percent in July from the same month in 2014.

Some economists argue that the downturn has bottomed out.

"Most of the indicators are turning and the rate of decline is slowing. The corner has been turned - but that's nothing much to celebrate," Chris Granville, co-founder of Trusted Sources, told CNBC on Tuesday.

"The real brunt of this shock has already been felt and this deep recession is the logical effect of last winter."

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