Many Russians have fled their country.
(Photo: IMAGO/SNA)
Moscow According to the domestic central bank, the Russian economy lost significant momentum after the partial mobilization at the end of September for the war against Ukraine. However, the state payments to those convened should cushion the negative consequences for consumer demand, Deputy Central Bank Governor Alexei Zabotkin told MPs on Tuesday.
President Vladimir Putin announced on September 21 that 300,000 people would be mobilized. As a result, it is estimated that hundreds of thousands of Russians left their country to avoid being deployed at the front – many of them young, well-educated men. Since the wages are often well above the wages of those drafted, the Russian government is hoping for stimulus for private consumption in the future.
The central bank has been instrumental in limiting the economic impact of the Ukraine conflict and Western sanctions against Russia. It initially raised its key interest rate to 20 percent, but then lowered it six times in a row to the pre-crisis level of 7.5 percent. “The board will analyze any changes in the situation as well as the incoming data,” said Zabotkin when asked whether interest rates were likely to remain on hold. The next interest rate decision is scheduled for October 28th.
The central bank assumes that the contraction of the Russian economy will bottom out in the first half of next year. In the current year, gross domestic product is likely to fall between four and six percent.
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“We will move smoothly towards stabilization of inflation at the target level,” said Zabotkin on the development of prices. “But the decline in inflation may be slower now. This is because the economic transformation requires significant price adjustments across a wide range of goods and services.”
>> Read here: The insidious poison of the sanctions: “Russia is becoming the backyard of the global economy”
According to official figures, the inflation rate was around 13.5 percent. The central bank is aiming for a value of four percent. According to its own forecasts, it will not reach this level again until 2024.
More: Putin is running out of money for his war – top economist Gurijew speaks of an “unprecedentedly bad situation”