The head of the Ministry of Economic Development of the Russian Federation has admitted that the country is on the verge of recession
20 June 16:26
Russian Minister of Economic Development Maksim Reshetnikov has admitted that the country’s economy is on the verge of recession. He made the announcement during the economic session of the St. Petersburg International Economic Forum 2025, "Komersant Ukrainian" reports.
“According to the numbers, we are cooling down, but all our numbers are a rearview mirror. According to the current feelings of the business and its indicators, we are, in general, already, I think, on the verge of a recession. On the verge,” Reshetnikov emphasized, commenting on the slowdown in GDP growth.
The minister’s speech came amid deteriorating key macroeconomic indicators: industrial production growth is slowing, business activity is declining, and the consumer confidence index is at its lowest level since the beginning of 2023. Additional pressure is exerted by tight monetary policy and the effects of international sanctions.
Elvira Nabiullina, the head of the Central Bank of the Russian Federation, for her part, called the current state of the economy not a recession but a “way out of overheating,” referring to the rapid growth of domestic demand and overloading of production capacity in 2023-2024. According to her, cooling is inevitable after excessive growth and serves as a stabilizing factor for the financial system.
However, in the end, even she said on camera at the St. Petersburg International Economic Forum that the resources that allowed the Russian economy to show growth for two years in the face of war and sanctions have been exhausted.
“We grew at a fairly high rate for two years because we used free resources,” she said.
According to Nabiullina, these resources include labor, production facilities, capital reserves of the banking system, as well as money from the National Welfare Fund, which was used by the government to patch holes in the budget and pay for trillion-dollar mega-projects.
“We need to understand that many of these resources are really exhausted,” Nabiullina said.
The unemployment rate, according to Rosstat, has fallen to a historic low of 2.3%, and mass emigration and recruitment of men for the war have created a shortage of personnel, which the government estimates at 2 million people.
Read also: Russian economy slows down sharply: analysis of the latest data
According to Rosstat, the level of capacity utilization at enterprises exceeded 80%, which was a record in modern history. The liquid assets of the National Welfare Fund (NWF) have tripled since the beginning of the war, to 2.8 trillion rubles. And this reserve will be completely exhausted in 2026, experts of the Russian Academy of National Economy and Public Administration warned.
Finance Minister Anton Siluanov also tried to smooth out the rhetoric, saying:
“We are experiencing a cold snap, but a cold snap always comes with summer.
However, he did not deny the existence of structural challenges in the economy, emphasizing that the government will continue to support strategically important industries and regions.
Analysts interviewed by Russian media say that a recession is possible as early as the second half of 2025 if the domestic decline is not offset by exports, stimulus measures, and economic diversification. Employment in the non-resource sector, household incomes, and investment activity are at risk.
Among the factors that have accelerated the economic slowdown, experts say
- the high key policy rate of the Central Bank (at 16%)
- inflationary pressure
- decline in household incomes;
- reorientation to less marginal markets in Asia and Africa;
- a significant reduction in business lending (especially to small and medium-sized enterprises).
According to some economists, the current state of the Russian economy is not just a cyclical downturn, but a possible beginning of a prolonged structural stagnation caused by restrictions on technology imports, capital outflows, and slower labor productivity growth.
The official forecast of the Ministry of Economic Development still maintains positive growth figures for 2025 – around 2% – but adjustments are already being considered amid incoming statistics and deteriorating business sentiment.
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