A Bracing Look at Russia's Economy: Uncertain Times Ahead
Economic Minister of Russia issues alert over impending economic contraction
St. Petersburg (dpa) - The Kremlin's economic czars have raised the alarm bells, painting a grim picture of the Russian economy's predicament. With economic numbers pointing to a significant slowdown, coupled with an awfully glum business sentiment, the Economic Minister Maxim Reshetnikov predicts a possible plunge into a recession at the St. Petersburg International Economic Forum (SPIEF). Blaming the Central Bank's misguided policies, he envisions a dismal outlook for investments in the coming quarters.
Reshetnikov bemoans the current interest rate level as a demotivator for businesses to invest. After a slight reduction in the key interest rate from 21 to 20 percent by the Central Bank, the minister expects investments in the third and fourth quarters of this year to dwindle below that of the previous year.
Central Bank Chief's Defense and Forecasts of Trouble
Central Bank Chief Elvira Nabiullina defends herself against claims of inept monetary policy, but she concurs with the gloomy prediction. Though sanctions have stifled growth for two years, Russia's economy has managed to sail through thanks to import substitution programs, vested capital reserves of the banking system, and funds from the National Wealth Fund. Nabiullina warns that many of these resources are running dry, necessitating a shift in focus towards a new growth model.
Russia has maintained a state of conflict with Ukraine for three long years. The modest prosperity of the recent past can be attributed primarily to the prodigious military buildup and increased allocations for defense and security expenditures.
Sources:
- RFE/RL
- Deutsche Welle
- Reuters
- The Gazette Review
- The Moscow Times
- Despite the Central Bank's defense, the grim prediction of an approaching recession in Russia's economy remains on the table, as Economic Minister Maxim Reshetnikov sees a dwindling investment due to the current high interest rate level.
- Businesses might struggle to invest in the coming quarters, as the Central Bank's policies and decreasing resources such as the National Wealth Fund highlight uncertain times for Russia's economy, also affecting general-news and politics.
