Russia must not let economy slip into recession, says Putin
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Russia must not let economy slip into recession, says Putin
Putin tells officials to ensure balanced growth for cooling economy. Bank of Russia hiked its key interest rate to the highest level since the early 2000s in October. Central Bank Governor Elvira Nabiullina has faced criticism from lawmakers and prominent businessmen, often over high interest rates or rouble volatility. Top bank Sberbank says it has financed no new projects this year.. Steel consumption was down 14% in January-May compared with the same period of 2024, steelmaker Severstal’s. (CHMF) largest shareholder, warning that certain businesses were downsizing or shutting down.. The new tab opens new tab, calling for faster rate cuts to incentivise companies to invest, says German Gref, CEO of Russia’s largest lender SBERbank (SBER.MM) Russia’s economy is on the verge of sliding into recession and monetary policy decisions will determine whether it falls into one or not, the Economy Minister said on Thursday.
Item 1 of 3 Russia’s President Vladimir Putin delivers a speech during a plenary session of the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia, June 20, 2025. REUTERS/Anton Vaganov
Summary
Companies Putin says Russia must not let economy slip into recession
Tells officials to ensure balanced growth for cooling economy
Pressure mounting on central bank to cut rates more quickly
Top bank Sberbank says it has financed no new projects this year
ST PETERSBURG, Russia, June 20 (Reuters) – Russia’s economy must under no circumstances slide into recession, President Vladimir Putin told an economic forum on Friday, in a clear instruction to assembled government ministers and central bankers.
The Bank of Russia hiked its key interest rate to the highest level since the early 2000s in October, seeking to curb stubbornly high inflation, before cutting it by one percentage point to 20% earlier this month.
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The Kremlin has said this easing did not go far enough, as the economy threatens to cool too quickly after running hot for two years thanks largely to huge increases in defence spending on the war in Ukraine.
“Our most important task is to ensure the economy’s transition to a balanced growth trajectory,” Putin said in a keynote speech at the St Petersburg International Economic Forum.
Consumer inflation is running at 9.59% on an annual basis, according to the economy ministry, well above the central bank’s 4% target, but has been gradually easing since late April.
“Balanced growth is moderate inflation, low unemployment, and continued positive economic dynamics… At the same time, some specialists and experts point to the risks of stagnation and even recession. This should not be allowed under any circumstances,” Putin said.
Economy Minister Maxim Reshetnikov, in a downbeat message to Russia’s showcase economic event, said on Thursday that the economy was on the verge of sliding into recession and monetary policy decisions would determine whether it falls into one or not.
Pressure on the central bank is mounting.
Central Bank Governor Elvira Nabiullina, credited with steering Russia through a serious of crises since being appointed in 2013, has also faced criticism from lawmakers and prominent businessmen, often over high interest rates or rouble volatility. She has remained in post thanks to Putin’s personal support
“It’s time to cut the rate and start heating up the economy,” Deputy Prime Minister Alexander Novak said on Friday.
Demand for credit is weak, said German Gref, CEO of Russia’s largest lender Sberbank (SBER.MM) , opens new tab , calling for faster rate cuts to incentivise companies to invest.
“It is especially worrying that we, as the largest bank, which finances…almost 60% of all investment projects in the country, have not financed a single new project since the new year,” Gref said on Friday.
‘SERIOUS PROBLEM’
Businesses, complaining for months about high rates stifling investment, have continued to bang the drum for a cut, with Alexey Mordashov, steelmaker Severstal’s (CHMF.MM) , opens new tab largest shareholder, warning that certain businesses were downsizing or shutting down.
“We are on the brink of a serious credit servicing crisis…and the number of bankruptcies is growing,” Mordashov said, warning that more businesses may become disillusioned with high rates and simply choose to hold money on high-interest deposits instead.
Steel consumption was down 14% in January-May compared with the same period of 2024, Mordashov said, highlighting how investment activity is down, hurting Russia’s long-term development and competitiveness.
“This cooling is a serious problem right now,” Mordashov said. “And to continue with this (monetary) policy is fraught with the intensification of these negative consequences.”
Reporting by Vladimir Soldatkin and Darya Korsunskaya; additional reporting by Anastasia Teterevleva; Writing by Alexander Marrow; Editing by Mark Trevelyan and Toby Chopra
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Russia must not let economy slip into recession, says Putin, after minister issues warning
Russia must not let economy slip into recession, says Putin, after minister issues warning. The Bank of Russia hiked its key interest rate to the highest level since the early 2000s in October. It then cut it by one percentage point to 20 per cent earlier this month. The Kremlin has said this easing did not go far enough, as the economy threatens to cool too quickly after running hot for two years thanks to huge increases in defence spending on the war in Ukraine. The central bank has also faced criticism from lawmakers and prominent businessmen, often over high interest rates or rouble volatility. Businesses have continued to bang the drum for a cut in interest rates, with steelmaker Severstal’s largest shareholder warning that certain businesses were downsizing or shutting down. “We are on the brink of a serious credit servicing crisis…and the number of bankruptcies is growing,” Mr Mordashov said.
Russia must not let economy slip into recession, says Putin, after minister issues warning
ST PETERSBURG, Russia – Russia’s economy must under no circumstances slide into recession, President Vladimir Putin told an economic forum on June 20, in a clear instruction to assembled government ministers and central bankers.
The Bank of Russia hiked its key interest rate to the highest level since the early 2000s in October, seeking to curb stubbornly high inflation, before cutting it by one percentage point to 20 per cent earlier this month.
The Kremlin has said this easing did not go far enough, as the economy threatens to cool too quickly after running hot for two years thanks largely to huge increases in defence spending on the war in Ukraine.
“Our most important task is to ensure the economy’s transition to a balanced growth trajectory,” Mr Putin said, in a keynote speech at the St Petersburg International Economic Forum.
Consumer inflation is running at 9.59 per cent on an annual basis, according to the economy ministry, well above the central bank’s 4 per cent target, but has been gradually easing since late April.
“Balanced growth is moderate inflation, low unemployment, and continued positive economic dynamics… At the same time, some specialists and experts point to the risks of stagnation and even recession. This should not be allowed under any circumstances,” Mr Putin said.
Economy Minister Maxim Reshetnikov, in a downbeat message to Russia’s showcase economic event, said on June 20 that the economy was on the verge of sliding into recession and monetary policy decisions would determine whether it falls into one or not.
Pressure on the central bank is mounting.
Central Bank Governor Elvira Nabiullina, credited with steering Russia through a serious of crises since being appointed in 2013, has also faced criticism from lawmakers and prominent businessmen, often over high interest rates or rouble volatility. She has remained in post thanks to Mr Putin’s personal support.
Russian Economic Development Minister Maxim Reshetnikov delivered a downbeat message at Russia’s showcase economic event. PHOTO: REUTERS
“It’s time to cut the rate and start heating up the economy,” Deputy Prime Minister Alexander Novak said on June 20.
Demand for credit is weak, said Mr German Gref, chief executive officer of Russia’s largest lender Sberbank, calling for faster rate cuts to incentivise companies to invest.
“It is especially worrying that we, as the largest bank, which finances… almost 60 per cent of all investment projects in the country, have not financed a single new project since the new year,” Mr Gref said on June 20.
‘Serious problem’
Businesses, complaining for months about high rates stifling investment, have continued to bang the drum for a cut, with Mr Alexey Mordashov, steelmaker Severstal’s largest shareholder, warning that certain businesses were downsizing or shutting down.
“We are on the brink of a serious credit servicing crisis…and the number of bankruptcies is growing,” Mr Mordashov said, warning that more businesses may become disillusioned with high rates and simply choose to hold money on high-interest deposits instead.
Steel consumption was down 14 per cent in January-May compared with the same period of 2024, Mr Mordashov said, highlighting how investment activity is down, hurting Russia’s long-term development and competitiveness.
“This cooling is a serious problem right now,” Mr Mordashov said. “And to continue with this (monetary) policy is fraught with the intensification of these negative consequences.” REUTERS
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Bank of England chief says Ukraine’s goal for price stability is credible and critical
“You have been very clear in public that after the security risks abate and appropriate macroeconomic conditions are established in place, you will return to the old way of doing things,” he said. He was speaking at a conference in London on the future of Ukraine’s economy. The country’s inflation rate has risen to 15.9% in the past year.
LONDON, June 20 (Reuters) – Bank of England Governor Andrew Bailey said on Friday that the Ukrainian central bank’s commitment to focus fully on price stability once security threats are lower was both credible and critical as he addressed a research conference in Kyiv.
“You have been very clear in public that after the security risks abate and appropriate macroeconomic conditions are established in place, you will return to conventional inflation targeting,” he said in his first visit to Ukraine’s capital.
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“It is a very clear commitment to get back to the established regime. And it is being done in a way that is not only critical but it also – to my reading – is credible,” he added in his spoken remarks at the conference.
Earlier this month the Ukrainian central bank held its benchmark interest rate at 15.5%, ahead of data showing that the country’s inflation rate rose to an annual rate of 15.9% on the back of higher food prices.
Ukraine targets an inflation rate of 5% but also uses exchange rate policy instruments and currency restrictions that are not part of the routine toolkit of most Western central banks.
Reporting by David Milliken; editing by William James
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China’s January-to-May fiscal revenue falls 0.3%
Fiscal revenue in the January-May period, totalling 9.66 trillion yuan ($1.34 trillion), was slightly less than the 0.4% drop over the first four months of the year. China’s economy, already dragged down by a prolonged property slump and tepid business and consumer confidence, has come under extra pressure from trade tensions with the United States. May’s economic data showed China’s factory output growth hit a six-month low as international demand was weak, although domestic retail sales were boosted by Labour Day holiday spending.
BEIJING, June 20 (Reuters) – China’s fiscal revenue declined by 0.3% in the first five months of 2025 from a year earlier, finance ministry data showed on Friday, as global trade uncertainty intensified by U.S. tariffs weighed on the economy.
Fiscal revenue in the January-May period, totalling 9.66 trillion yuan ($1.34 trillion), was slightly less than the 0.4% drop over the first four months of the year.
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Tax revenue fell 1.6% in the January-May period from the previous year and non-tax revenue grew 6.2%.
China’s economy, already dragged down by a prolonged property slump and tepid business and consumer confidence, has come under extra pressure from trade tensions with the United States after Donald Trump’s return to the White House in January.
May’s economic data showed China’s factory output growth hit a six-month low as international demand was weak, although domestic retail sales were boosted by Labour Day holiday spending and a government-subsidised consumer goods trade-in programme.
The country’s May exports growth missed expectations, falling significantly from previous month while a persistent threat of deflation squeezed companies’ profits.
Friday’s data also showed revenue from land sales by China’s local governments remained subdued and maintained a double-digit year-on-year contraction of 11.9% in the first five months, reflecting the extent of the property downturn.
Fiscal expenditure increased by 4.2% year-on-year in January-May, slightly slower than the 4.6% rise in the January-April period.
The United States and China, the world’s two largest economies, last week agreed on a framework to resolve trade disputes during talks in London, following a 90-day truce reached in May. However, a lasting deal has proved elusive as issues including rare earths exports restrictions are unresolved.
To buttress the economy, Chinese policymakers unveiled monetary stimulus measures in May, including interest rate cuts and a major liquidity injection. Analysts say the benefits of the measures may not yet be fully realised.
($1 = 7.1835 Chinese yuan renminbi)
Reporting by Beijing Newsroom; editing by Mark Heinrich and Barbara Lewis
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Russia needs monetary policy changes to avert a recession, says economy minister
Russia’s economy is on the verge of sliding into recession, Economy Minister Maxim Reshetnikov warned on Thursday. He urged the central bank to support the economy when it comes to monetary policy. The Kremlin said that the current key interest rate – of 20% – was putting a break on the economy even though that was a conscious decision. Russia this month cut interest rates for the first time since 2022, but borrowing costs remain close to record levels and for months businesses have complained of high rates stifling investment. President Vladimir Putin in March urged his economic officials not to freeze the Russian economy as if it were in a “cryotherapy chamber” with high borrowing costs. The Centre for Macroeconomic Analysis and Short-Term Forecasting, an economic think tank close to the government, said this week that most civilian sectors are in recession.
Summary
Companies Russian economy on brink of recession, says minister
Minister urges central bank to show economy some ‘love’
Putin has urged officials not to freeze Russia’s economy
Economy overheated during military-fuelled spending spree
ST PETERSBURG, Russia, June 19 (Reuters) – Russia’s economy is on the verge of sliding into recession and monetary policy decisions will now determine whether it falls into one or not, Economy Minister Maxim Reshetnikov warned on Thursday.
Reshetnikov delivered the downbeat message at Russia’s annual showcase economic forum in the northern Russian city of St Petersburg, an event sometimes called “the Russian Davos” which is meant to promote investment in the Russian economy.
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He urged the central bank to support the economy when it comes to monetary policy as the Kremlin said that the current key interest rate – of 20% – was putting a break on the economy even though that was a conscious decision.
Russia this month cut interest rates for the first time since 2022, but borrowing costs remain close to record levels and for months businesses have complained of high rates stifling investment.
The central bank has kept rates high to curb inflation in the overheated economy, which is focused on the needs of the military fighting in Ukraine.
“According to the figures, there is cooling, but all our figures are in the rear-view mirror,” Reshetnikov said on a panel at the St Petersburg International Economic Forum.
“According to the current feelings of businesses and business indicators, we are already, it seems to me, on the verge of going into recession. On the verge.”
Reshetnikov clarified that a recession was not inevitable though and later told journalists that avoiding one would depend on policy decisions, above all on interest rates.
“I didn’t predict a recession. I said we’re on the brink. From here on out, everything will depend on our decisions,” he said.
In addition to keeping faith in Russia’s 4% inflation target, Reshetnikov said he was in favour of “giving the economy some love”, addressing Central Bank Governor Elvira Nabiullina, who was on the same panel.
President Vladimir Putin in March urged his economic officials not to freeze the Russian economy as if it were in a “cryotherapy chamber” with high borrowing costs and Reshetnikov has previously warned of ” hypothermia” risks
For now, the outlook does not look promising.
The Centre for Macroeconomic Analysis and Short-Term Forecasting, an economic think tank close to the government, said this week that most civilian sectors are in recession and there is no sign of what can kick-start economic growth.
“It seems that an ‘an economy of stagnation’ has formed,” the think tank analysts’ wrote.
At Thursday’s session, central bank governor Nabiullina, said the current slowdown in GDP growth was “a way out of overheating”. Finance Minister Anton Siluanov said there was cooling in Russia, but that “summer always follows a cold snap”.
Alexander Vedyakhin, First Deputy CEO of Russia’s largest lender Sberbank (SBER.MM) , opens new tab said in an interview with Reuters this week that tight monetary policy was creating over-cooling risks and said much lower interest rates of 12-14% were needed to restart investment lending.
Reporting by Reuters in St Petersburg, Darya Korsunskaya in London and Elena Fabrichnaya in Moscow; Writing by Alexander Marrow; Editing by Andrew Osborn and Toby Chopra
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