Russian Economy Faces Challenges as Inflation and Interest Rates Rise
The Russian economy has been facing significant challenges in 2024, with inflation, high interest rates, and the volatility of the ruble being the major hurdles, according to a report by the Russian newspaper Wedomosti.
Despite initial projections of a 3.9-4% growth in the country’s gross domestic product (GDP) at the beginning of the year, experts now predict a slowdown in the economy’s growth. The interest rate, currently at 21%, is expected to further slow down the economy, with a predicted growth of only 1.3% in 2025.
“We expect a 1.5-1.8% growth in the GDP for 2025, which is a very low growth rate for Russia” said Dmitri Belousow, head of the Center for Macroeconomic Analysis and Forecasting. “The slowdown in the economy is due to a lack of personnel, which cannot be compensated by investments in modernizing the companies due to the high interest rate.”
Experts warn of a gradual stagnation in sectors such as transportation, trade, construction, and the manufacturing industry, which are not linked to the military-industrial complex, according to Wedomosti. The tightening of sanctions on Russian oil exports is also expected to have negative consequences, as the restrictions on the export of Russian oil have been widened since the beginning of the year.