Wladimir Putin.
Despite clear warnings from his own ranks, Russia's President Wladimir Putin refuses to acknowledge the country's severe economic problems. While Economic Minister Maxim Reshetnikov and Kremlin-affiliated experts warn of stagnation and recession, Putin is ignoring the alarming signals, according to a report on the online platform of »Der Spiegel«.
The controversy was sparked by the economic forum in Wladivostok, where Putin struck an optimistic tone: »I am confident that we will succeed in stabilizing economic growth with minimal inflation«, he is quoted as saying. This statement stands in stark contrast to the recent forecast by Finance Minister Anton Siluanov, who revised growth for 2025 from 2,5 percent to just 1,5 percent.
The main reason for the weakness is the consequences of the Ukraine war and Western sanctions. The shift to a war economy has led to significant disruptions: arms companies are paying high salaries that other sectors cannot match, there is a labor shortage due to conscription and flight abroad, and inflation is at 8,79 percent – more than double the central bank's target.
To combat inflation, the central bank is keeping the key interest rate at 18 percent. However, these high interest rates are dampening investments and particularly burdening small and medium-sized enterprises. In addition to the structural problems, targeted Ukrainian attacks on Russian infrastructure are hampering the economy. Expert Andrey Gurkov warns: »The war economy is reaching its capacity limits. Spare parts are missing, and China is taking advantage of Russia's dependence.«
MK
