{"id":31301,"date":"2025-06-19T10:19:01","date_gmt":"2025-06-19T10:19:01","guid":{"rendered":"https:\/\/financialrush.com\/?p=31301"},"modified":"2025-06-19T10:19:01","modified_gmt":"2025-06-19T10:19:01","slug":"russia-on-brink-of-recession-says-economy-minister","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=31301","title":{"rendered":"Russia on brink of recession, says economy minister"},"content":{"rendered":"<p> \n<\/p>\n<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description o3-type-body-base\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=f991d318-7b09-4a50-8c8b-132966dea56f\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Russia is on the verge of a recession, its economy minister said on Thursday, the first public admission that the country\u2019s war economy is starting to cool three years after President Vladimir Putin ordered the full-scale invasion of Ukraine. <\/p>\n<p>Maxim Reshetnikov said at the president\u2019s flagship economic conference in St Petersburg that \u201cthe numbers show [the economy] is cooling off\u201d. <\/p>\n<p>\u201cBut all our numbers are a rear-view mirror. Judging by business sentiment at the moment, we\u2019re basically already on the brink of falling into a recession,\u201d the minister said, according to Interfax.<\/p>\n<p>Putin has presided over a record surge in defence spending, which grew 25 per cent year on year to Rbs13.1tn ($167bn) last year and drove two consecutive years of GDP growth above 4 per cent following a contraction in 2022, the first year of the war.<\/p>\n<p>The Kremlin\u2019s embrace of \u201cmilitary Keynesianism\u201d has driven strong wage increases and a tight labour market, but has begun to cool off this year as demand reaches capacity.<\/p>\n<p>The central bank\u2019s hawkish monetary policy amid persistent inflation of nearly 10 per cent has stifled investment, Reshetnikov argued. He said the ministry could revise its prediction of 2.5 per cent growth in August following the central bank\u2019s future interest rate decisions. The central bank\u2019s growth forecast is between 1 and 2 per cent.<\/p>\n<p>Reshetnikov\u2019s comments reflect a long-standing dispute among policymakers over how to combat inflation as Russia\u2019s record spending to fuel the war has generated two years of wage and price rises while driving employment to near capacity.<\/p>\n<p>Senior officials and businessmen have called on Elvira Nabiullina, Russia\u2019s central bank governor, to speed up cuts to the key interest rate as companies \u2014 including even many of those benefiting the most from the Kremlin\u2019s defence spending \u2014 struggle with high borrowing costs. <\/p>\n<p>The central bank cut rates by a full percentage point to 20 per cent earlier this month, citing a drop in annual inflation from double digits to 9.8 per cent in June, but has indicated it will continue to pursue its inflation target of 4 per cent. The CBR\u2019s long-stated goal is to bring inflation below 4 per cent.<\/p>\n<p>Reshetnikov called on the CBR to find a balanced approach between fighting inflation and encouraging growth. \u201cWe all understand that fighting inflation is important. But we are simplifying the discussion a bit.\u201d<\/p>\n<p>He added: \u201cI\u2019m just for showing the economy a little bit of love, just a bit, as well as believing in 4 per cent.\u201d<\/p>\n<p>Nabiullina, speaking on the same panel, said Russia was \u201ccoming out of [a period of] overheating\u201d and said the central bank would not revise its 4 per cent target. \u201cThe economy of demand grew, and the economy of supply lagged behind. That\u2019s where overheating and inflation come from,\u201d she said.<\/p>\n<p>Putin has backed Nabiullina\u2019s hawkish monetary policy amid the growing chorus of discontented voices in Russia\u2019s industrial lobby, but has indicated in recent months that he wants policymakers to strike a compromise. <\/p>\n<p>The Russian president told his top economic officials on Wednesday that he wanted to \u201censure balanced growth of the economy and its structural changes\u201d.<\/p>\n<\/div>\n\n<br \/><a href=\"https:\/\/www.ft.com\/content\/f991d318-7b09-4a50-8c8b-132966dea56f\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this&hellip;\n","protected":false},"author":6,"featured_media":31302,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":["post-31301","post","type-post","status-publish","format-standard","has-post-thumbnail","category-us","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/31301","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=31301"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/31301\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/31302"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=31301"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=31301"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=31301"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}