The process of contraction has begun
One of the main concerns today is the risk of an economic pullback caused by logistics constraints on one side and tight liquidity on the other. Survey data from leaders of backbone businesses indicates that the slowdown has already started. While employment has so far shown resilience, the downturn is evident in other areas, according to Belousov, speaking at the Federation Council as quoted by Interfax.
In industry and commerce, the decline in production runs at roughly 11 percent, while other sectors show decreases around 9 to 10 percent, the First Deputy Prime Minister noted.
Belousov highlighted that geopolitical adversaries aim to isolate Russia from global markets. He described a deliberate attempt to sever Russia from world economic relations, outlining a four-ring blockade that would gradually erode the economy and push it toward disintegration.
In his assessment, the blockade would comprise financial, commercial, transport, and humanitarian dimensions that together constrain growth and liquidity.
soft loans
The government has set a policy to support the economy through soft loans while keeping inflation in check, targeting a funding level of 7 to 8 trillion rubles. The flow of funds to the real economy has been accelerated via the state budget to shore up activity. Industrial and commercial enterprises can access preferential loans at roughly 11 percent, and a similar program has been launched for backbone agricultural organizations, with a 10 percent preferential rate for them.
Soft loans of up to 158 billion rubles were earmarked for agricultural enterprises to support spring fieldwork, with a plan to increase this amount by an additional 60 billion rubles. The IT sector will also benefit from low-rate financing, with loans offered at no more than 3 percent for new projects and development, and around 11 percent for existing activities.
Belousov emphasized persistent demand for support among backbone businesses and mid-sized companies. He explained that macroeconomic constraints define the operating envelope, and that authorities have mapped out the limits within which lending can proceed without triggering inflationary pressure. In total, channels for lending to the economy are expected to range around 7 to 8 trillion rubles, reflecting the government’s approach as explained by the Ministry of Economic Development.
decline in GDP
Rosstat data show that industrial production in February 2022 rose after an 8.6 percent gain in January, with February over the previous year rising by 6.3 percent. In the January–February period of the current year, the sector advanced by 7.5 percent.
On the eve of these figures, the head of the Accounts Chamber stated in a Federation Council briefing that a decline in GDP of around 10 percent is anticipated for the year. He noted that the Finance Ministry and the Ministry of Economic Development are assessing the expected downturn and that the official projection foresees a drop exceeding 10 percent.
It was noted that the projected GDP decline would impact budget revenues and law enforcement financing, but regional authorities would receive the necessary support. The Finance Ministry is examining expenditure reallocations that will require ongoing monitoring and adjustment.
Earlier, the head of the Central Bank acknowledged a likely GDP reduction as part of adjusting to new external conditions. The central bank intends to pursue a policy aimed at protecting the economy and the financial system, preserving household incomes and savings in light of sanctions from Western countries, and using all appropriate tools to minimize risks to financial and price stability.
Despite the anticipated contraction, officials stressed that the economy would adapt, aiming to return to a growth trajectory, boost production, create new jobs, and increase domestic investment. A focus on financial stability and controlled inflation was framed as essential, with the central bank committing to the measures needed to sustain confidence in the economy’s resilience.