Russia ‘on the verge of going into a recession,’ economy minister warns

Russia media reported Economy Minister Maxim Reshetnikov delivered the warning at the St. Petersburg International Economic Forum, the annual event designed to court investors.

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.

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.