Russia’s economy is “on the brink of going into a recession”, the country’s economy minister has reportedly said.
Economy minister Maxim Reshetnikov delivered the warning at the St Petersburg International Economic Forum, an annual event in Russia’s second largest city designed to showcase the country’s economic strength and attract foreign investment.
Russian business news outlet RBC quoted the official as saying “the numbers indicate cooling, but all our numbers are (like) a rear-view mirror. Judging by the way businesses currently feel and the indicators, we are already, it seems to me, on the brink of going into a recession.”
Russia’s economy, impacted by numerous sanctions following the Kremlin’s military actions in Ukraine in February 2022, has so far performed better than expected. High defense spending has driven growth and maintained low unemployment, albeit fueling inflation. Simultaneously, wages have increased to keep up with inflation, leaving many workers in a better financial position.
Significant recruitment bonuses for military personnel and death benefits for those killed in Ukraine have also injected more money into Russia’s poorer regions.
However, long-term challenges such as inflation and limited foreign investment continue to pose threats to the economy, raising concerns about the sustainability of its militarized state.
Economists have cautioned about increasing strain on the Russian economy and the potential for stagnation due to insufficient investment in non-military sectors.
During a session at the forum in St Petersburg, Mr. Reshetnikov stated that Russia was “on the brink,” and the possibility of a recession hinges on the government’s decisions.
“Going forward, it all depends on our decisions,” Mr. Reshetnikov reportedly said, according to RBC.
RBC also reported that Russia’s finance minister Anton Siluanov and Central Bank governor Elvira Nabiullina offered more optimistic views.
Mr. Siluanov acknowledged the economy “cooling,” but added that after any cooling, “the summer always comes,” according to RBC.
Ms. Nabiullina reportedly said that Russia’s economy was simply “coming out of overheating,” according to RBC.
