Russia's economy has reached the verge of recession. Economy minister Maxim Reshetnikov gave this information at the St. Petersburg international Economic Forum on Thursday. Along with this, he warned that if no steps are taken soon, it will be difficult to avoid recession.
russia cuts interest rates
russia has cut interest rates this month after the year 2022. This has reduced the cost of borrowing from 21 percent to 20 percent. Its purpose is to promote investment by reducing the cost of borrowing. However, it is still not very low, so businessmen are shying away from taking loans.
Here, due to high interest rates for the last several months, investment has decreased, which has slowed down the pace of economic growth. Meanwhile, Central bank Governor Elvira Nabiullina said that the kind of situation of businesses here seems that we are already on the verge of recession.
Alexander Vedyakhin, first deputy CEO of Sberbank, Russia's largest bank, said in an interview with Reuters this week that Russia's tight monetary policy is creating a risk of recession for the economy here. He suggested that an interest rate of up to 12-14 percent could prove to be effective in promoting investment.
This is also a big reason for recession in Russia
The second biggest reason for recession in russia is the war with Ukraine. Due to this, inflation has increased a lot here. There has been an atmosphere of tension between the two countries for the last three years. Due to this war, interest rates have been increased so that inflation remains under control. But despite this, inflation here remains close to 9.5 percent in 2024 and 9.8 percent in 2025. The prices of potatoes, onions and other vegetables and eggs have also increased. Due to the war, many citizens are leaving the country. This has led to a huge shortage of labor. people are also migrating in search of better opportunities. This is affecting production.
Russia's focus is more on defense
Due to the war with Ukraine, russia doubled its defense expenditure in 2023. russia also increased the defense budget in 2024 and in 2025, the Russian parliament Duma approved a defense budget of Rs 10 lakh 67 thousand crore (126 billion dollars). Now it is obvious that if most of the budget is spent on the defense sector, then less money will be left for basic things like education, health, infrastructure.
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