Minister declares Russia on verge of recession

(MENAFN)
Russia’s economy is nearing a potential recession, Economic Development Minister Maksim Reshetnikov cautioned on Thursday during a session at the St. Petersburg International Economic Forum (SPIEF 2025).

Following the 2022 escalation in Ukraine, Russia has endured sweeping Western sanctions. Despite this pressure, the country’s economy showed unexpected resilience, recording 4.1% GDP growth in 2023 and 4.3% in 2024, making it the fourth-largest global economy by purchasing power parity (PPP).

However, Reshetnikov noted that current economic indicators and business sentiment suggest the economy is weakening. “What we’re seeing in the data reflects the past. At present, we’re essentially at the edge of a recession,” he stated.

He later clarified that a recession isn’t guaranteed and that future developments will depend on policy decisions, particularly concerning interest rates. “I didn’t say a recession is certain — only that we’re close. What happens next depends on the choices we make,” he added.

Finance Minister Anton Siluanov described the economy as experiencing a “cooling period,” expressing optimism by saying, “summer always follows winter.”

Central Bank Governor Elvira Nabiullina described the current phase as an adjustment from economic “overheating,” caused by strong consumer demand outpacing supply, which drove up inflation.

Earlier in June, the Bank of Russia cut its key interest rate by 100 basis points to 20% — the first cut since the central bank tightened rates in response to sanctions in 2022.

The bank expects economic growth to slow to 1–2% in 2025, citing its monetary policy effects. In contrast, the government forecasts a more favorable 2.5% growth rate.

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