Russia's economic strain: Inflation soars, debt threats loom
The Russian economy is beginning to falter, with inflation exceeding 9%, the central bank increasing the main rate to 21%, and bank loan interest rates approaching 30%. The ruble exchange rate has dropped to the levels seen during the initial months of the war, reports the French daily, "Le Monde".
The Parisian daily notes that indicators of a swift deterioration in Russia's economic situation are multiplying, acknowledged by executives from Russian companies, even those with close Kremlin ties. The International Monetary Fund (IMF) forecasts Russia’s economic growth will decrease to 1.3% of GDP in 2025.
- The central bank rate is 2.5 times higher than inflation, and it's still not declining. It seems the cure is more harmful than the disease, - assessed Alexey Mordashov, head of the mining and metallurgical company Severstal.
Sberbank's head, German Graf, highlighted the challenges facing the economy, warning that it may not endure for much longer as evident signs of a slowdown emerge.
Sergei Chemezov, who leads Rostec, a central figure in the industrial-military sector according to Le Monde, expressed concern that rising interest rates are significantly hindering growth in the industrial sector. He warned that maintaining this approach could lead to the collapse of most enterprises.
An anonymous member of the Russian business community shared with Le Monde that the economic situation is precarious, with warnings being directed at the Kremlin that, while the economy is currently stable, it cannot sustain itself for much longer. They emphasized the urgency of resolving the conflict in Ukraine swiftly.
However, a truce would signal to the political elite that this is a solution far from the Kremlin's original goals, and for the regime, it could spell trouble. The facade is fragile! We witnessed this during Yevgeny Prigozhin's rebellion," the newspaper's source continues.
Will Donald Trump visit Moscow?
U.S. President-elect Donald Trump has allowed reports to circulate that he may soon visit Moscow to sign an agreement that would effectively force Kyiv into territorial concessions, but would freeze the conflict. The Kremlin has not indicated any interest in a truce - notes "Le Monde".
A European diplomat in Moscow tells the newspaper that, for now, Vladimir Putin "is sticking to his fundamental principles" and makes it clear that peace will only be made on his terms.
In the weeks ahead, Putin will monitor Trump closely to assess the state of American military support for Ukraine. Meanwhile, he confronts significant challenges within Russia, including sanctions and their growingly concerning consequences on the economy, as noted by the diplomat.
Thierry de Montbrial, president of the World Policy Conference, predicts that the Russian leader will be watching Trump for several months. It would be in the Kremlin's interest to avoid mobilization and an economic collapse, but "Putin is not in a hurry."
Yevgeny Prigozhin, head of the Wagner Group, a mercenary organization, died on August 23 in a plane crash under unclear circumstances. It is speculated that this crash was Putin's revenge for Prigozhin's rebellion against the Wagner Group in June.
On June 24, Wagner forces took control of the Russian army headquarters in Rostov-on-Don and then began advancing toward Moscow. Prigozhin demanded the "restoration of justice" in the army and the dismissal of Defence Minister Sergey Shoygu. However, later that evening, he announced a retreat and withdrawal of mercenaries to field camps to "avoid bloodshed."
