Putin preps Russia for slow economy as it fights inflation

Vladimir Putin is preparing the public in Russia for an economic slowdown in 2025, with growth dropping down to 1.9% in the first months of the year.

Inflation remains high at over 10%, and the Russian head of state emphasized the need to tame prices while ensuring a “soft landing” for the country’s economy.

Russia to see smaller economic growth this year, Putin admits

Russian President Vladimir Putin has acknowledged the ongoing slowdown in the Russian economy that’s likely to continue throughout the year, presenting it as a foreseen and even wanted development in the light of Moscow’s attempts to calm down inflation.

During a meeting devoted to economic issues, Putin noted that Russia’s gross domestic product (GDP) grew by 1.9% year-on-year in January and February while highlighting that a more significant growth was registered in the manufacturing sector.

“As you know, the Government, the Central Bank, and experts agree that this year the dynamics of the gross domestic product will be slightly lower than last year. In fact, we talked about this, and this is what we were striving for,” the Russian leader stated, according to a press release on the Kremlin’s website.

For comparison, Russia’s GDP increased by 4.5% year-on-year in Q4 of 2024, according to official data quoted by Trading Economics. The statistics website pointed out that this growth rate, fueled by war-related spending that has been overheating the Russian economy, marked the fastest expansion in three quarters.

“We talked about the so-called ‘soft landing’ to a certain extent, in order to maintain macroeconomic indicators and, above all, to combat inflation,” Putin reminded government officials participating in the meeting.

“Inflation is still at high levels – more than 10%,” he admitted, stressing: “As I have already said, it is important to achieve a sustainable slowdown in price dynamics.”

IMF expects Russian GDP increase to drop down to 1.5% in 2025

For the whole 2024, Russian gross domestic product grew by 4.3%, according to the latest provisional data from Russia’s Federal State Statistics Service (Rosstat). This month, the state agency raised its estimate from an earlier 4.1%.

The International Monetary Fund (IMF) expects Russia’s economy to grow by 1.5% in 2025, the Russian business daily Kommersant wrote in an article. And that’s the improved forecast from this week, the newspaper noted.

Meanwhile, the Russian Federation’s budget deficit stood at 2.2 trillion rubles (over $26 billion) during the first quarter of the year ending in March, Putin also remarked, pointing out that state expenditures have increased by 25% in annual terms.

The Russian president drew attention to the importance of constantly analyzing economic conditions in а complicated international environment with serious fluctuations in commodity and financial markets and amid intensifying global competition.

He recalled that at a previous meeting, the government officials had set a goal to “ensure stable rates of economic growth while reducing inflation and maintaining a low level of unemployment” and said that the latest stats “confirm the relevance of this approach.”

Putin’s remarks come as Russia is holding talks with the U.S. on the ending of the Ukraine conflict, which has caused massive changes in its economy under heavy international sanctions and increased military spending. The outcome of these negotiations and that of the brewing trade war over President Donald Trump’s tariffs are likely to significantly affect the outlook for the Russian economy, observers say.

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