Russia’s Economy Minister, Maxim Reshetnikov, has issued a stark warning that the country may be nearing an economic recession, citing troubling indicators and prevailing business sentiment.
Speaking at the St. Petersburg International Economic Forum, Reshetnikov said the latest figures show a slowdown, and while the data may reflect the past, the current mood among businesses paints a bleaker picture for the immediate future.
“The numbers indicate cooling, but all our numbers are like a rearview mirror,” he said.
“Judging by the way businesses currently feel and the indicators, we are already, it seems to me, on the brink of going into a recession.”
The minister urged the Central Bank of Russia to shift from its restrictive monetary approach and show “a little love” to the real economy by easing financial conditions to stimulate growth.
High Interest Rates and War Spending Drag Economy
In October 2024, the Bank of Russia raised the benchmark interest rate to 21 percent, aiming to contain soaring inflation. The rate was held at that level for several months before a modest cut to 20 percent in June 2025. Despite the adjustment, GDP growth slowed to just 1.4% year-on-year in the first quarter of 2025, marking the weakest quarterly performance in two years.
Economists say the slowdown is being driven by two persistent issues: massive defence-related government spending amid the ongoing war in Ukraine, and a growing labour shortage, partly due to conscriptions and emigration. These factors have caused inflation to remain stubbornly high, with annual inflation still above 8% more than double the central bank's long-term target of 4%.
Critics argue that the current growth, largely propped up by military production, is not sustainable. Many analysts warn that this type of expansion distorts real economic progress, as it does not translate into productivity improvements or benefits to the broader civilian economy.
Conflict Rages On: Drone Strikes, Nuclear Risks, and Prisoner Swaps
While the economic outlook dims, the military conflict in Ukraine continues to escalate. In the early hours of Friday, drone attacks struck the eastern Ukrainian cities of Kharkiv and Odesa, according to local officials and social media updates. Though casualty figures are still unknown, infrastructure and civilian homes reportedly suffered significant damage.
At the Zaporizhzhia nuclear power plant, which remains under Russian military control, the International Atomic Energy Agency (IAEA) reiterated grave concerns about the facility’s safety. The UN nuclear watchdog stated the plant cannot safely resume operations while the large-scale war persists. Ongoing issues with cooling systems and the facility’s reliance on external electricity supplies pose serious risks, the IAEA said.
Diplomatic Movement: Captive Exchange Offers Glimmer of Relief
In a rare moment of cooperation, Russia and Ukraine conducted another exchange of prisoners of war on Thursday. Ukrainian President Volodymyr Zelenskyy confirmed the development, announcing that several Ukrainian soldiers many of whom are critically ill or injured had returned home from Russian captivity. The Russian Ministry of Defence acknowledged the swap as well, describing it as part of ongoing humanitarian arrangements.
Zelenskyy and Kyiv Slam Russian-Iranian Alliance
President Zelenskyy used the occasion to deliver a harsh rebuke of Russia’s support for Iran amid escalating Middle East tensions. He argued that Moscow’s alignment with Tehran, especially during a period of regional unrest, underscores the need for tougher international sanctions against the Kremlin.
“When one of their accomplices loses their capability to export war, Russia is weakened and tries to interfere,” he said.
“This is so cynical and proves time and again that aggressive regimes cannot be allowed to unite and become partners.”
Meanwhile, Ukraine’s Deputy Foreign Minister Andrii Sybiha condemned Russia's recent statements criticizing strikes on Iranian territory, accusing Moscow of hypocrisy and selective outrage.
“Russia condemns military action against its allies, yet wages war against its neighbor,” Sybiha said. “The only rational conclusion is that Russia cannot be trusted in any situation. It is always part of the problem, never the solution.”
Conclusion: A Nation Under Pressure on All Fronts
Russia’s economy is now under immense pressure caught between rising military expenditures, crippling inflation, and slowing growth. At the same time, its role in global conflicts and controversial alliances is isolating the country diplomatically.
As recession looms and public sentiment shifts, the coming months may prove decisive not just for Russia’s economic stability, but for its geopolitical future.
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