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Putin warns: Russia's economy is fighting inflation!
Putin admits economic difficulties in Russia as inflation and sanctions weigh on the country. A look at the situation.
Putin warns: Russia's economy is fighting inflation!
The Russian economy faces current challenges that even state propaganda acknowledges. Vladimir Putin expressed concern about high inflation, which he called an "alarming signal," at an annual news conference. Among the challenges mentioned are an overheating of the economy and the need to slow down growth. The forecast for economic growth in 2025 is between 2 and 2.25 percent and is categorized as a “soft landing”. According to Putin, Western sanctions imposed since Russia's attack on Ukraine have put a significant strain on the economy.
How daily news reported, the ruble has lost value in recent months, partly due to new US sanctions that bar Gazprom Bank from international business. So, in November 2024, the ruble exchange rate fell by about 15 percent against the dollar, which confirms the current rate of 106 rubles against one dollar. Before the attack on Ukraine, the dollar cost 78 rubles. These economic problems are compounded by rising inflation-related costs, particularly around the holidays.
Economic burdens and social impacts
The Russian central bank raised interest rates to 23 percent to combat inflation, which is resulting in high borrowing costs for entrepreneurs and increasing burdens on the population. Retirees report rising prices and difficulty affording essentials. A 75-year-old pensioner, Viktor Markov, sees the Ukraine conflict as the cause of the price increases and noted that he and his wife cannot afford the traditional "red caviar" for New Year.
Despite the economic difficulties, Vladimir Putin shows no willingness to withdraw from Ukraine. At the press conference, he said that there were no conditions for negotiations with Ukraine and called for using the Istanbul agreement as a basis for a peace treaty. However, this agreement contained conditions that were unacceptable to Ukraine. Discussing the country's economic challenges, Alexander Gabuev from the Carnegie Russia Eurasia Center noted that the situation in Russia continues to deteriorate.
In addition, there are significant financial burdens due to the high military spending, which already accounts for 21 percent of the state budget and is set to increase to 29 percent in 2023. Oil and gas revenues have fallen: the price of oil fell from $80 a barrel in 2022 to an estimated $63.40 in 2023.