Putin acts like he doesn’t want peace. Russia’s economy depends on it

Russian President Vladimir Putin may be a push factor when it comes to negotiations with Ukraine, with the surrogate economy, slowing growth and expanding budget deficit.

You will be forgiven to think that Putin thinks that Moscow refused to entertain the ceasefire with Kiev to this point and that he thinks that Ukraine is constantly bombing. It indicates that an olive branch can soon be expanded or accepted at any time.

Moreover, Kremlin’s coolest response to the promise of a bilateral meeting between US President Donald Trump’s Putin and Ukrainian President Volodymyr Zelenskyy, instead of acquiring themselves, barely commented on the proposal of talks.

Russian Ministry of Finance stated In the early August, the budget deficit reached 2.2% of GDP between January and July this year equally 4.88 trillion rubles ($ 61.1 billion). Government expenditures during the same time zone “25.19 trillion rubles with an increase of 20.8% ($ 317.8 billion)”, State News Agency TASS reportedReferring to the Ministry of Finance.

Unseen state defense expenditures were supported by an increase in oil and gas sales and taxes that continue to Russian allies such as China and India until this point.

However, oil export revenues decrease with sanctions and decrease in global demand, which means that the Kremlin may be forced to take into account other expenditure cuts or more tax increase.

In the meantime, Russia’s growth appearance is not that pink. Russia grew by 4.3%in 2024, but this year, much more inadequate is expected to expand to 1%to 2%. According to the Central Bank of Russia (CBR). This poses a risk because it consider whether to follow the peace for the Kremlin or to continue the war against Ukraine, while there is an advantage in the battlefield.

“For the Kremlin, a short growth period can be tolerated for the Kremlin, although it is combined with lower oil prices, it will reduce financial income. Main gambling is that the cooling of the economy will not trigger a long stagnation.” He said in the analysis in late July.

“So far, the government can maintain defense and social expenditures, but it may need to be cut elsewhere, which puts it in a dangerous path.”

Authorized, sanctions, low oil prices and challenges for property rights can slow down economic growth and wage increases at a time when he deterreds private capital investment.

“On the other hand, if the government does not reduce financial support, high risk of inflation will return.” He said.

The increase in defense expenditures to a great extent, inflationist pressures that cause imbalances in supply and demand in other industrial sectors and widespread food price increases in other industrial sectors are among the fears of the economy that the economy is overheating.

The Central Bank of Russia spent several years to try to domesticate the stubborn high inflation rate of the country, which meets 17.8% immediately after Russia occupied Ukraine in February 2022. Apparently, the efforts were successful, the price increase rate rose to 8.8% in July.

He directed CBR To reduce the base ratio by 200 basis points to 18% last monthAfter a 100 -point discount previous month. In addition, it reduced the appearance of inflation for 2025, and in 2026, a 4% threshold would be reached.

Central Bank, “Existing inflationist pressures, including the underlying ones, are decreasing faster than previously predictions” He said after the 25th of July meeting“The growth of domestic demand is slowing down. The economy continues to return to a balanced growth path.”

CEPA’s Koyandr said that a balanced growth route was “a veil for anemic growth” and said that CBR “claimed a victory against gallop prices”.

Putin, “balanced growth moderate inflation, low unemployment and positive economic dynamics … At the same time, some experts and experts indicate risks of stagnation and even stagnation. St. Petersburg International Economic Forum and translated by Reuters.

The latest growth data continues to slow down in the second quarter, which decreases 1.1% with an annual growth of 1.1% in the first quarter.

“The economy is clearly struggling in the midst of the imbalances accumulated due to war efforts. We expect growth in future neighborhoods to slow down.”

Peach, “Great painting … The Russian economy is struggling under the weight of the high interest rates and ongoing war efforts. Long -term weak growth period lies in the store.”

“Business sense and investment intentions surveys have fallen to multi -year low levels. The labor market is cooling and weaker demand will help alleviate inflation pressures. Capital economy envisaged 0.8% GDP growth in 2025.”