Russian economy: Putin contradicts stagnation forecast for Russia

Russian President Vladimir Putin has rejected fears about a stagnating economy of his country. Russia’s economy needs a “gentle landing” to get inflation under control, the Kremlin chief said at a appearance at the Economic Forum in Vladiwostok. “I am sure that we will succeed in solving questions to support the necessary pace in economic growth with a minimal level of inflation,” he said.

Minister of Economics Maxim Reschetnikow had previously warned that the Russian economy cools down much faster than expected from the government. The growth forecast of 2.5 percent will be significantly reduced shortly, he announced. His former predecessor German Gref even spoke of a “technical stagnation” in which the country stuck in the second quarter. The months of July and August also indicated that growth is moving against zero, said Gref, who is now heading the country’s largest money house, Sberbank. Putin expressly contradicted these theses – and also the demand for a quick interest rate reduction.

Putin: Location in some sectors is not easy

In some sectors, the situation is not easy, the Kremlin boss admitted. “But everyone also understands when inflation flushes the economy, it doesn’t end well,” said Putin. Therefore, the central bank must act very carefully. As a result of the Russian war of aggression in Ukraine, this had temporarily raised interest rates to a record level of 21 percent.

With massive investments in the armaments economy and a switch to war economy, Russia has long succeeded in creating growth despite western sanctions. However, civilian economic sectors have been complaining about problems for a long time.