Economic Slowing in Russia: Silovanov Affirms No Recession, Managing Economic Cooling instead
Cooling Down the Russian Economy: What's the Plan?
After announcing plans to collaborate with the Central Bank to cool the Russian economy, Minister of Finance Anton Siluanov sharing some insights about the current economic status. As reported by TASS, the economy is showing signs of a controlled slowdown, avoiding recession for now.
"No recession here, and the measures we've implemented in the budget and the Central Bank's monetary policy have worked. Inflation has dropped," Siluanov clarified.
Coordinated actions by the government and the Central Bank have already shown progress. Despite last year's GDP growth of over 4%, it fell to 1.5% in the first quarter of 2025 and 1.9% in April.
Siluanov emphasized the positive attitude of business investors towards investment in development. Despite the slowing growth rates, entrepreneurs are keen on investing, paving the way for future growth.
With several interconnected factors causing the economic slowdown, it's crucial to understand the underlying issues. Defence-related industries, already operating near full capacity, can't expand further, while the civilian sector struggles under high interest rates. The economy faces deep structural imbalances, with high and persistent inflation and weakened ruble adding to the pressure. Moreover, military spending and fiscal pressures have diverted resources away from productive civilian use, causing strain and limiting its development. Lastly, the fragile monetary environment, with stubbornly high inflation expectations and unstable currency appreciation, makes it challenging to stimulate civilian economic activity effectively.
## Central Bank's Challenges in Reviving the Russian Economy
While the current slowdown isn't a recession, Russia's economy is grappling with multiple challenges. War-driven constraints in defense industries, persistent inflation, strained budget, and constrained civilian sector growth under high interest rates all contribute to the slowdown. The Central Bank's efforts to ease monetary policy and a temporarily strong ruble provide hope, but these structural and fiscal pressures continue to weigh on the broader economic growth prospects.
"The Central Bank, in its attempt to revive the Russian economy, faces multiple challenges. Among them are high and persistent inflation, war-driven constraints in defense industries, and a strained budget."
"To stimulate the civilian economic activity effectively, the Central Bank must address the fragile monetary environment with stubbornly high inflation expectations and unstable currency appreciation, while also managing the constrained growth of the civilian sector under high interest rates."
