Putin aide warns about Russian economy
(MENAFN) A senior Kremlin advisor has warned that the Russian economy is under pressure and called for rapid easing of monetary policy to prevent further decline.
In June, the Bank of Russia reduced its key interest rate by 100 basis points to 20%, the first cut since 2022 when it adopted a strict monetary stance to stabilize the economy amid Western sanctions.
Boris Titov, Russia’s Presidential Commissioner for Entrepreneurs’ Rights, highlighted concerns in a recent survey by the Russian Academy of Sciences’ economic forecasting institute, which assessed industrial and infrastructure firms this spring.
Titov noted a decline in investment activity, with fewer than half of companies currently investing, down from 64% a year earlier, and only 35% preparing new production compared to 50% previously. Access to credit has become more difficult, with just 32.5% of firms finding investment loans affordable, down from nearly 40%, while more businesses are investing without borrowing. There is also growing worry about weakening domestic demand.
“If conditions don’t improve, problems will worsen,” Titov said, emphasizing the urgent need to ease monetary policy. He stressed that affordable credit is essential outside the defense sector and that current growth largely relies on momentum from past gains.
Despite tough Western sanctions since the 2022 Ukraine conflict, Russia’s economy has surpassed expectations, with GDP growth of 4.1% in 2023 and 4.3% in 2024, making it the world’s fourth-largest economy by purchasing power parity.
However, last month, Economic Development Minister Maksim Reshetnikov cautioned that the economy might be cooling, depending largely on policy decisions, especially interest rates. The Bank of Russia forecasts growth slowing to 1-2% in 2025, while the government projects a slightly higher 2.5%.
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