Russian economy’s controlled cooling ‘painful’: Deputy premier

Difficulties in accessing credit due to high interest rates appear main factor in less than 3% growth estimate for 2025, requiring need to lower interest rates to warm up economy, says Alexander Novak

By Emre Gurkan Abay and Emir Yildirim

ST. PETERSBURG (AA) - The Russian economy’s controlled cooling has been a “painful” process, the country’s Deputy Prime Minister Alexander Novak said on Friday.

While speaking at the St. Petersburg International Economic Forum (SPIEF), Novak stated that the Russian economy grew by 4.3% last year, but the growth rate this year is expected to be only 2.3%.

He said the fluctuations in the economic activity this year led to lower estimates of growth, noting that the country’s Central Bank believes the growth will be even lower than 3% this year.

Novak cited difficulties in accessing credit due to high interest rates as the main factor in the cooling down of the Russian economy.

“This is a painful process,” he said. “We have to lower interest rates to warm up the economy again.”

The Russian Central Bank last lowered its policy rate on June 6, for the first time since September 2022, from 21% to 20%.

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