Bloomberg News spoke with experts to understand what specifically will happen to Russia's economy as it continues its war of aggression against Ukraine.
Points of attention
- The economic situation in Russia is deteriorating because Putin does not want to stop the war against Ukraine.
- The fall in oil prices could be a painful blow to the Kremlin and its war machine.
Putin has driven the Russian economy into a dead end
Oleg Vyugin, an economist and former high-ranking Central Bank official, made a statement on this matter.
In his opinion, the relatively good period for the Russian economy has already ended.
"High inflation is eating away at all this seemingly short-term success," the expert emphasized.
One cannot also ignore the fact that the aggressor country faces sanctions, a weakened currency, unclear prospects for oil prices, and the fear of losing support from China.
As noted by Serhiy Dmitriev, an information technology specialist, high interest rates have failed to curb price growth, which is more than double the target.
According to him, record borrowing costs have already become noticeable for the aggressor country.
What's next?
As mentioned earlier, the Central Bank forecasts inflation at 4.5-5% by the end of the year, and the key rate at an average of 17-20%.
Sofia Donets, an economist at T-Investments, predicts that this will be a year of belt-tightening for Russia.
For consumers and businesses, this means reduced credit for purchases and investments. The collapse in oil prices is one of the biggest risks to the economy in 2025, Donets believes. If the price falls even lower, Russia will have to make sacrifices, she says.
Promsvyazbank believes that a quick end to the war could contribute to the strengthening of the ruble, the return of foreign investors and export revenues.
However, if dictator Putin does not hurry with this, inflation and tough policies will persist, which will be a new blow to the Russian economy.
