Putin warns: Russia's economy is staggering like it was in Soviet times!

Putin warns: Russia's economy is staggering like it was in Soviet times!

The Russian economy is in serious crisis, as senior government officials, including Vladimir Putin, confirmed at an annual press conference. Putin expressed concern about the high inflation figures in Russia, describing them as an “alarming signal”. He identified a number of challenges, including the overheating of the economy and the need to slow growth. In addition, he gave a forecast for economic growth in 2025 of 2 to 2.25 percent, which was described as a "soft landing." The Western sanctions imposed since Russia's attack on Ukraine are putting a significant strain on the economy.

How merkur.de reported that although Russia was able to circumvent some of these sanctions, particularly in the area of ​​oil and gas sales, the ruble still lost about 15 percent against the US dollar in November 2024. To combat inflation, the Russian central bank has raised the key interest rate to 23 percent, which leads to high borrowing costs and puts a heavy burden on entrepreneurs. Inflation also has a detrimental effect on the population; Retirees report rising prices and increasingly need support to afford essentials. Viktor Markov, a 75-year-old pensioner, sees the ongoing conflict in Ukraine as the main cause of the price increases.

Economic challenges and the fall of the ruble

In addition to the issues raised at the summit of the conference, research has shown that the ruble continues to lose value due to new sanctions against Russia that exclude Gazprom Bank from international business. In an analysis tagesschau.de It is also noted that the ruble exchange rate before the attack on Ukraine in February 2022 was 78 rubles for one US dollar, but has currently risen to 106 rubles. These developments indicate that the Russian economy is suffering greatly from the consequences of the war, which has high costs.

Spending on the military is also increasing, with 21 percent of the national budget being invested in armaments and an increase to 29 percent planned for 2023. Amid these difficulties, the Russian Union of Industrialists and Entrepreneurs is concerned about high interest rates that hinder investments in civil industry. Political pressure on the central bank could lead to further economic disruption in the future, while consumers face continued inflation of up to 26 percent next quarter.