Putin acts as he doesn’t want peace. On this depends on the Russian economy

The Russian economy, with its delayed growth and expansion of the budget deficit, can become one of the taps when it comes to the thinking process of Russian President Vladimir Putin over negotiations with Ukraine.

You are forgiven for the fact that Putin is not so interested in Mira, given Moscow’s refusal to entertain the ceasefire regime with Kiev until this point and the permanent bombing of Ukraine. It is unlikely to signal that an olive branch can be extended or accepted soon.

Moreover, Kremlin’s steep response to US President Donald Trump’s promise to hold a bilateral meeting between Putin and President Ukraine Loladimir Zelensky, and Russia practically does not comment on the talks, not to mention their consent.

The Ministry of Finance of Russia beware Earlier in August, the budget deficit reached 4.88 trillion rubles ($ 61.1 billion) between January to July this year, which is 2.2% of GDP. During the same terms, state expenses increased by 20.8% to 25.19 trillion. TASS reportsReferring to the Ministry of Finance.

So far, unprecedented levels of public spending have been supported Continues the sale of oil and gas for Russian allies such as China and India, and Increase in taxes.

But oil export income is reduced against the background of sanctions and less world demand, which means that the Kremlin may be forced to consider other costs or further taxes.

At the same time, the prospect of Russia’s growth is also not so pink. In 2024, Russia increased by 4.3%, but this year it is expected to expand much more negligible 1%to 2%, According to the Central Bank of Russia (CBR). This poses the risk to the Kremlin because it believes whether it is worth the peace or continue the war against Ukraine, while it has the advantage on the battlefield.

“For the Kremlin, the short period of low growth is tolerable, although in combination with less oil prices will reduce financial revenues. The main game is that the cooling of the economy will not cause a long recession,” – Alexander Colendr, senior employee of the European Policy Center (CEPA) ,,,,,,, said in the analysis in late July.

“So far, the government can support protection and social costs, but it may be necessary to reduce anywhere else that put it on a dangerous path,” he added.

Reducing costs or savings can further slow economic growth and increase wages at a time when sanctions, low oil prices and problems with property are hindered by private capital investment, he noted.

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

Inflation pressure, which is heavily caused by a surge of protection, sanctions and lack of work that caused imbalance in demand and supply in other industrial sectors, as well as bewildered hiking prices for foodAlso on the Kremlin’s mind amid the fears that the economy has overheated.

The Central Bank of Russia spent several years, trying to tame a stubborn inflation in the country, which reached 17.8% immediately after Russia invaded Ukraine in February 2022. Allegedly, his efforts were successful, and the price level in July cooled to 8.8%.

This pushed CBR cut your base rate by 200 basic points to 18% last monthFollowing a 100-point cuts the previous month. It also reduced the inflation forecast by 2025, predicted the 4% threshold will be reached in 2026.

“The current inflation pressure, including the main ones, is reduced faster than predicted,” Central Bank said after the meeting of July 25Adding that “the growth of domestic demand is slowing down. The economy continues to return to the balanced growth path.”

Calian Cepa noted that the “balanced growth path” was “euphemism for anemic growth”, warning that, while CBR “stated that winning the price for jumping … it comes at the price.”

“Balanced growth is moderate inflation, low unemployment and continuation of positive economic dynamics … At the same time, some experts and experts point to the risk of stagnation and even recession. This should not be allowed in any circumstances,” Putin said, in the statement to such International Economic Forum of St. Petersburg and translated by Reuters.

Recent growth data, of course, indicate a slowdown, an increase of 1.1% in the second quarter decreased to 1.4% of the expansion in the first quarter.

“The economy is clearly fighting among the imbalances created by the military efforts. We expect growth to slow further smoking quarters,” said Liam Peach, a senior economy economy in August, said in an e -mail analysis.

“The big picture … is that the Russian economy is fighting under the weight of high interest rates and constant military efforts. The long period of weak growth is the store,” Peach added.

“Surveys of business and investment intentions have fallen to long-standing minimums. The labor market is cooled, and weaker demand will help to alleviate the inflation pressure. The capital economy predicted GDP growth by 0.8% for 2025,” with recession this year is still a very high risk. “