Russia's economy in crisis: threatened wave of bankruptcies in 2025!

Russia's economy in crisis: threatened wave of bankruptcies in 2025!

Russia's economy faces a challenging 2025 as a rise in inflation and a looming wave of corporate bankruptcies could threaten the country's stability. President Vladimir Putin described the current inflation of 9.3 percent as an “alarming signal” and tried to combat the problem with multiple increases in the key interest rate, which now stands at 21 percent. According to experts, this measure is intended to dampen demand for goods and services, but at the same time has led to massive financing difficulties for companies. The Interfax news agency reports that in recent months a late payment rate of 19 percent has already been recorded among large and medium-sized companies and 25 percent among small companies, reinforcing warnings about possible bankruptcies, especially in the retail sector, where up to 200 shopping centers are at risk, as fr.de reported.

In addition, the pressure on the economy is increased by Western sanctions and a shortage of skilled workers in important industries, especially the defense industry. Rosneft boss Igor Sechin and other business leaders have criticized the central bank's financial policy. They warn that high interest rates are driving up production costs enormously and thus endangering companies' margins. While the central bank aims to reduce inflation to 4.5 to 5.0 percent by the end of 2025, analysts expect economic activity to decline sharply - growth could fall from 3.5 percent in 2024 to just 1.8 percent in 2025, as ostexperte.de predicted.

Experts warn of the risk of stagflation, a condition in which the economy stagnates while prices continue to rise. These critical conditions are forcing the central bank to think about adjusting interest rate policy. A possible reduction in the key interest rate has already been announced for 2025 if inflation declines. The developments suggest that Russia could be heading into crisis due to the combination of high interest rates, weak economic growth and rising prices.