Fueled by massive military spending, the Russian economy could face a sharp slowdown amid growing restrictions on key sectors, according to reportsSetimes Setimes Bloomberg.
According to the agency, Russia’s GDP growth in the second quarter was 4% on an annual basis, but experts predict that growth rates will halve in the second half of the year.
The slowdown is said to be mainly due to the depletion of manpower resources due to the competition between the military and civilian sectors. In addition, the construction and banking sectors are no longer protected from the impact of high interest rates following the end of most concessional mortgage programs.
“This is the last burst of growth before a noticeable cooling in the Russian economy,” said Alex Isakov, economist at Bloomberg Economics.
Unemployment in Russia has fallen to an all-time low of 2.4%, lower than in any of the G7 countries, with enterprises employing no more than 2 million people, according to Rosstat.
According to his forecast, Russia’s economic growth will slow to 2 percent in the second half of the year and to 0.5-1.5 percent next year.
Governor of the Bank of Russia Elvira Nabiullina noted “Labor reserves and production capacity are nearly exhausted.” The central bank raised its policy rate by 200 basis points to 18% in July to counter stagflation risks.
Previously Nabiullina in the name Reasons for the interest rate increase.
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Source: Gazeta
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