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- Recession is coming in Russia, Situation is Difacity for Ordinary Russians
Moscow53 minutes ago
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People shop in a supermarket in Moscow.
Russia’s economy is on the verge of recession. Economy Minister Maxim Reshitnikov said this at the St. Petersburg International Economic Forum. He said that the figures of business and industry are showing that the country is very close to recession. That is, economic activities are slowing down, business is decreasing, and investment is stopping.
Come, let us understand this whole matter in easy language through questions and answers…
Question 1: What are the reasons behind the recession in Russia?
Answer: These situations have been created due to three major reasons…
- First, interest rates in Russia are very high. Recently, the interest rate was reduced from 21% to 20%, but it is still so much that businessmen are afraid to take loans.
- Second, Russia has economic sanctions on Russia due to the ongoing war with Ukraine, which has made trade and investment difficult.
- Third, Russia’s earnings are being affected due to lower oil prices. However, in the last few days, crude oil prices have increased due to Israel-Iran war.
Question 2: Why are interest rates so high?
answer: Inflation in Russia is very high due to the war with Ukraine for almost 3 years. It was 9.5% in 2024 and also remains around 9.8% in 2025.
The Central Bank increased interest rates to control inflation. People spend less at higher interest rate, which reduces demand and inflation comes under control. But this is costing businessmen to take loans, due to which investment and production is decreasing.
Question 3: What is the effect of Ukraine War on this?
answer: Due to the war with Ukraine, Russia will spend 41% of its budget in 2025 on defense and security, the highest from the time of cold war. Due to this, money is being left less for the rest of the sector, such as education, health, and infrastructure.
Also, Western Sections has made Russian oil and gas exports difficult. According to a report by Russia, in 2023, Russia’s oil earnings decreased by more than 20%.
The Russian-Ukraine battle began in February 2022. A picture of a drone attack in Zaporizia, Ukraine from Russia.
Question 4: The economy was fine at first, what happened suddenly?
answer: In 2023 and 2024, Russia’s economy shown growth of 3.6% and 4.3%, despite the sessions. But this growth was due to war expenses and good oil prices. Now labor deficiency, more inflation, and strict interest rates stopped growth. GDP growth in February 2025 was just 0.8%, the lowest in the last two years.
Question 5: What is the effect on the common people?
answer: Things are becoming difficult for common Russians. Due to inflation, food and drink, such as butter, eggs, and vegetables, have become more than 10% expensive. Due to higher interest rates, it has become difficult to take loans for car, home, or business. Also, there is a huge shortage of labor due to war and migration, affecting production and services.
Question 6: What will Russia do now?
answer: The government and the Central Bank have two routes. One, they reduce the interest rates so that the business gets boost, but this can increase inflation further. Second, continue that strict policy so that inflation is controlled, but this will increase the risk of recession.
Some experts say that the government may have to increase tax or reduce budget expenses. But it is difficult to reduce defense spending, as the war is still going on.
Question 7: What do you want to say about Russia’s economy?
answer: Economy Minister Reshtinikov says that if the steps are not taken early, it will be difficult to postpone the recession. At the same time, Central Bank Governor Elvira Nabiulina says that this cold of the economy is relief from “overheating”.
He means that the earlier economy was growing very fast, which was not durable for a long time. But Alexander Vedyakhin, Deputy CEO of Surberbank, says that such a strict policy can make the economy more cold. The interest rate should be brought up to 12-14%.
Economy Minister Reshitnikov says that if steps are not taken early, it would be difficult to postpone the recession.
Question 8: Will Russia really go to recession?
answer: Many economists are saying that Russia’s economy will increase by 1.4–1.8% in 2025, which is much less than the earlier 4%. Some believe that the second and third quarters may have “technical resessions” (negative growth up to two quarters). But a lot will depend on the decisions of the government of Russia and the Central Bank.
Question 9: What will be the effect on the world?
answer: Russia is the world’s big oil and gas exporter. If its economy is weak, the global energy market may be affected. Also, Russia has increased trade with countries like China due to Ukraine War and Sections.
The recession of Russia may also cause some damage to these countries. The World Bank has estimated global growth 2.3% for 2025, which is lower than before, and Russia’s condition may affect it further.