According to the Ministry of Defense of Great Britain, the Russian economy is facing more and more problems against the background of the war against Ukraine.
Points of attention
- Inflationary pressure is rapidly intensifying in the aggressor country of the Russian Federation.
- High interest rates can limit investment and business development in Russia.
- Rising public spending, labor shortages and sanctions pressure will create even more problems for the Kremlin.
The Central Bank of the Russian Federation continues to make risky decisions
British intelligence officers pay attention to the recent decision of the Central Bank of the Russian Federation to raise the interest rate to 21%.
What is important to understand is that this is the highest rate since the beginning of the full-scale invasion of Ukraine.
As noted in the British Ministry of Defense, this level of the interest rate reflects the concern of the Central Bank of the Russian Federation about the growth of inflationary pressure in the Russian economy.
According to the head of the Central Bank Elvira Nabiulina, in order to bring inflation back under control, it is necessary to urgently introduce "more radical changes" in monetary policy.
However, key managers of Russian companies are increasingly criticizing the Central Bank's decision to maintain high interest rates, the intelligence added.
The era of bankruptcies in Russia is gaining momentum
British analysts draw attention to the fact that high interest rates in the Russian economy, quite possibly, will limit investment and business growth.
Over the past 3 years, the volume of corporate loans and their share linked to the Bank's base rate have increased. This has resulted in higher interest rates leading to an increase in the cost of debt.
These costs are likely to increase financial pressure on business: according to available data, the number of corporate bankruptcies in Russia will be 20% higher in 2024 than in 2023, the report says.
The British Ministry of Defense predicts that inflationary pressures are likely to intensify next year, as government spending is forecast to rise, while labor shortages and sanctions pressures will persist.
