Russia can slide into the recession soon and runs its worst harvest in 17 years, which increases the stress of an economy that has already witnessed a decrease in energy revenues.
At the present time, Vladimir Putin has devoted additional US sanctions, bought more time to sue his war on Ukraine by meeting with President Donald Trump in Alaska last week, which sparked a wave of diplomatic activity with European allies attempt to support the security guarantees of Kev.
But the time may not be the ally of Russia.
While Trump did not follow his threats to punish Moscow for its failure to reach a ceasefire agreement, there was no sign of talks to remove current sanctions and revive economic cooperation.
“So it is too early to adopt a more optimistic view on the Russian economy, which we believe is swinging on the brink of recession,” said Tatiana Orlova, economist in Oxford Economic, in a Monday note.
Since the Alaska meeting did not produce anything that would move the needle, it reaffirmed its expectations for the growth of Russian GDP to slow this year to only 1.2 % of 4.3 % in 2024.
After that, the economy will run further, as it reached a hindrance soon with a decrease in growth to less than 1 % in 2026 and 2027.
“We also believe that there is a high possibility of the Russian economy that slips into a technical stagnation in the coming quarters,” Orlova added.
Similar warnings were accumulating this year. In June, Economy Minister Maxim Richnikov warned this Russia was “on the edge” of the recession. Russian banks also raised red flags on a Possible debt crisis Since high interest rates weigh the borrowers’ ability to serve loans.
Last month, the central bank reduced interest rates by 200 basis points to revive stalling growth, after walking long distances at high levels to fight inflation that was stunned by Russia’s war on Ukraine.
Russian harvest and economy season
Meanwhile, Russia is facing a catastrophic harvest despite being agricultural power, making more pressure on the economy and Kremlin’s financing.
Cereal and fertilizer exports in the country were not approved due to concerns about the lack of food and were the source of the economic power of Russia.
But July has witnessed the lowest exports of grain for this month since 2008, according to Peter Francoban, a co -fellow of Russia and Eurasia at the International Institute for Strategic Studies, which attributed it to the intensification of climate volatility.
He explained in this year that the crops were damaged by unreasonable frost in the spring, in addition to the conditions of heating and drought in the summer Modern job. The total grain production is now expected to drop to 130 million metric tons, a decrease of 18 % of the peak of 2022.
“The harvest of Russia is 2025 is more than just the weather: it reveals the structural fragility of the war economy in Russia and the increasing risks of a system based on financial temporary stores and fossil fuel.”
In reality, The Russian financial temporary store disappears Criticism also diminishes. The curtain and gas and gas revenues, the main source of funds, fell 27 % in July one year to 787.3 billion rubles, or about 9.8 billion dollars.
As war spending increased, the result was the expansion of budget deficits. Russia was forced to take advantage of its reserves in the National Wealth Fund, which reduced $ 135 billion in January 2022 to only 35 billion dollars last May.
“The Russian economy is rapidly approaching a financial crisis Project Syndicate Op-Ed Earlier this month. “Although this may not be sufficient to force Putin to seek peace, it indicates that the walls are closed to it.”
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