Russia’s economy cools and gives signs of hypothermia, Minister said

Russian Economy Minister Maxim Reshetnikov called on the Central Bank to take into account the delayed inflation of his meeting to determine the interest rates next week.

At a meeting of the State Duma Budget Committee, he warned that the economy was already showing signs of « hypothermia ». The Central Bank has not changed the leading interest rate since October, when it left it at 21%. This policy restrained investment just when the economic impact of increasing military spending begins to weaken.

In March, President Vladimir Putin called on his economic officials not to freeze the Russian economy, as if he was in a « cryotherapeutic camera » with high interest rates on loans. Many analysts have interpreted this as a call to start a relief cycle (although Putin also states that this cooling is inevitable).

This happened after the first comments of Reshetnikov to start « cooling » in January, while in the food, chemical industry and mechanical engineering, the growth rate slows down.

Inflation in recent weeks has been in the range of 3-4%, when it is recalculated on an annual basis, said Minister of Economic Development. « We expect the May data to consolidate this trend and, of course, we expect that the central bank will take this into account when making decisions, because we also see the risks of economic hypothermia in this regime. »

The Ministry predicts annual inflation for 2025 7.6% – an assessment that Reshetnikov described as « realistic ».

The large Russian exporters, including Rusal and Gazpromneft, have reduced the planned volume of goods such as metals and petroleum products they send on railway transport, showed a document to Russian railways seen by Reuters last week. This is an example of the real impact of suppressed demand as the country’s economy slows down.

The next meeting of the Central Bank for determining interest rates is scheduled for June 6.