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Russia is about to recession, said his Economic Minister on Thursday, the first public admission that the country’s war economy begins three years after the full invasion of Ukraine three years after ordering the full invasion of Ukraine.
Maxim Reshetnikov said at the flagship conference of the President of St. Petersburg that “the numbers (the economy) cool down”.
“But all of our figures are a rear -view mirror. The rating according to business atmosphere is basically just before the edge in a recession,” said the minister according to Interfax.
Putin has presented a record start of defense spending last year, which rose to $ 13.13 ($ 167 billion) compared to the previous year and after a contraction in 2022, the first year of war, two consecutive years of GDP growth rose over 4 percent.
The hug of the Kremlin of “military Keynesianism” has driven strong wage increases and a narrow job market, but has cooled down this year because the demand reached capacity.
The Hawkian monetary policy of the central bank in the middle of a persistent inflation of almost 10 percent has suppressed investments, argued Reshetnikov. He said the ministry could revise its forecast of 2.5 percent in August after the future interest decisions of the central bank. The central bank’s growth forecast is between 1 and 2 percent.
Reshetnikov’s comments reflect a long -term dispute among political decision -makers about it RussiaThe record spending on the fuel consumption of the war generated wages and price increases for two years, while employment led to almost capacity.
Elvira Nabiulllina, the governor of Russia Central Bank, asked senior officials and business people to accelerate the cuts on the key interest rates, since companies – including many of many who benefit most from the defense spending of the Kremlin – to fight with high credit costs.
The central bank Lower the rates for a full percentage point 20 percent at the beginning of this month, citing a decline in annual inflation from double digits to 9.8 percent in June, but stated that it will continue to pursue its inflation target of 4 percent. The long -term goal of the CBR is to bring inflation below 4 percent.
Reshetnikov asked the CBR to find a balanced approach between combating inflation and promoting growth. “We all understand that combating inflation is important. But we simplify the discussion a little.”
He added: “I am only in favor of showing the economy a little love, just a little bit and believe in 4 percent.”
Nabiullina, who spoke in the same body, said that Russia was “from an overheating of (one time) and added that the central bank would not revise its 4 percent goal.” The economy of demand grew and the offer was remained. Overheating and inflation come here, “she said.
Putin has supported Nabiulllina’s Hawkian monetary policy in the middle of the growing choir of unsatisfied voices in the Russia’s industrial lobby, but has stated in the past few months that he wants political decision -makers to get a compromise.
The Russian President announced his top management officers on Wednesday that he wanted to secure a balanced growth of the economy and its structural changes.
