In Moscow on February 7 (Reuters) - "High inflation stands as the primary challenge for the Russian economy in 2025," as Prime Minister Mikhail Mishustin stated. He also anticipated a decline in economic growth from the 4.1% recorded last year. Consumer prices rose by 9.5% in 2024 and have persisted in climbing this year, hitting 9.9% on an annual basis, primarily due to extensive state spending over the last three years.
"Inflation clearly emerges as the main challenge," Mishustin conveyed to Putin during a Kremlin meeting where 2024 statistics were discussed. Inflation has become a major concern for Russia's economy and consumers, witnessing significant price hikes, notably for staple foods such as butter, eggs, and potatoes.
The central bank increased its benchmark interest rate to 21% last October, the highest level since the early 2000s, aiming to curb inflation, though paused at the December meeting due to elevated borrowing costs. Mishustin emphasized the need for a responsible fiscal and macroeconomic policy in coordination with the Bank of Russia, underscoring the importance of halting inflation for sustainable long-term economic growth.
Despite the economy growing by 4.1% in 2024, slightly exceeding the official forecast of 3.9%, concerns exist over the industrial growth predominantly concentrated in military sectors, with civilian industries experiencing stagnation.
The central bank foresees a slowdown in growth rates to 0.5% to 1.5% next year. Putin urged the government to pursue "balanced growth" and reduce inflation, emphasizing the necessity for structural economic changes.
While acknowledging challenges, Mishustin highlighted Russia's economic resilience amid severe sanctions, contrasting it with lower growth figures in the US, Germany, and France in 2024. Putin emphasized the significance of achieving a path of balanced growth and reducing inflation rates.
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