After Overheating, The Russian Economy Is Threatened By Overcooling

• 26.05.2025, 19:03

The Russian government has warned of the threat of a sharp deterioration of the situation in the economy.

The Minister of Economy of Russia said that due to the policy of the Central Bank of the Russian Federation, the Russian economy is threatened with overcooling - a drop in growth below the optimal level. This is reported by Interfax.

A year ago, Russia was talking about overheating of the economy - excessive growth, which threatened uncontrolled price growth.

That is why the Central Bank of Russia was forced to raise the key rate (up to 21% at the end of 2024) to "cool" the economy. Now the Russian Ministry of Economic Development is concerned that this cooling process may go too far and lead to a recession.

The current forecast for inflation in Russia in 2025 at 7.6% is realistic, but takes more into account the accumulated potential of late 2024 and early 2025, said the head of the Russian Ministry of Economic Development Maksim Reshetnikov.

"The current inflation rate - we see that inflation in recent weeks is invested in the range of 3-4%, if weekly data is translated into annual mode. The other thing is that weekly data is still counted for a limited list of goods.... We are waiting for the results of May, but recently our weekly data do not differ much from the monthly data," Reshetnikov said.

"We expect that this will be taken into account by the Central Bank in time when making decisions. As we also see risks of overcooling of the economy in the current regime," the minister warned.