Russia ‘on the verge of going into a recession,' economy minister warns
Russia's economy is on the verge of sliding into recession and monetary policy decisions will now determine whether it falls into one or not, Economy Minister Maxim Reshetnikov warned on Thursday.
Reshetnikov delivered the downbeat message at Russia's annual showcase economic forum in the northern Russian city of St Petersburg, an event sometimes called 'the Russian Davos' which is meant to promote investment in the Russian economy.
He urged the central bank to support the economy when it comes to monetary policy as the Kremlin said that the current key interest rate – of 20% – was putting a break on the economy even though that was a conscious decision.
Russia this month cut interest rates for the first time since 2022, but borrowing costs remain close to record levels and for months businesses have complained of high rates stifling investment.
The central bank has kept rates high to curb inflation in the overheated economy, which is focused on the needs of the military fighting in Ukraine.
Story continues below advertisement
'According to the figures, there is cooling, but all our figures are in the rear-view mirror,' Reshetnikov said on a panel at the St Petersburg International Economic Forum.
'According to the current feelings of businesses and business indicators, we are already, it seems to me, on the verge of going into recession. On the verge.'
Reshetnikov clarified that a recession was not inevitable though and later told journalists that avoiding one would depend on policy decisions, above all on interest rates.
'I didn't predict a recession. I said we're on the brink. From here on out, everything will depend on our decisions,' he said.
2:03
Russia facing more sanctions after no ceasefire reached: EU
In addition to keeping faith in Russia's 4% inflation target, Reshetnikov said he was in favor of 'giving the economy some love,' addressing Central Bank Governor Elvira Nabiullina, who was on the same panel.
Story continues below advertisement
President Vladimir Putin in March urged his economic officials not to freeze the Russian economy as if it were in a 'cryotherapy chamber' with high borrowing costs and Reshetnikov has previously warned of 'hypothermia' risks.
Get daily National news
Get the day's top news, political, economic, and current affairs headlines, delivered to your inbox once a day. Sign up for daily National newsletter Sign Up
By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy
For now, the outlook does not look promising.
The Centre for Macroeconomic Analysis and Short-Term Forecasting, an economic think tank close to the government, said this week that most civilian sectors are in recession and there is no sign of what can kick-start economic growth.
'It seems that an 'an economy of stagnation' has formed,' the think tank analysts' wrote.
At Thursday's session, central bank governor Nabiullina, said the current slowdown in GDP growth was 'a way out of overheating.' Finance Minister Anton Siluanov said there was cooling in Russia, but that 'summer always follows a cold snap.'
Alexander Vedyakhin, First Deputy CEO of Russia's largest lender Sberbank, said in an interview with Reuters this week that tight monetary policy was creating over-cooling risks and said much lower interest rates of 12-14% were needed to restart investment lending.
2:31
Russian economy rebounds despite Western isolation
The economy, hit with a slew of sanctions after the Kremlin sent troops into Ukraine in February 2022, has so far outperformed predictions. High defense spending has propelled growth and kept unemployment low despite fueling inflation. At the same time, wages have gone up to keep pace with inflation, leaving many workers better off.
Story continues below advertisement
Large recruiting bonuses for military enlistees and death benefits for those killed in Ukraine also have put more income into the country's poorer regions. But over the long term, inflation and a lack of foreign investments remain threats to the economy, leaving a question mark over how long the militarized economy can keep going.
Economists have warned of mounting pressure on the economy and the likelihood it would stagnate due to lack of investment in sectors other than the military.
(Reporting by Reuters in St Petersburg, Darya Korsunskaya in London and Elena Fabrichnaya in Moscow; Writing by Alexander Marrow; Editing by Andrew Osborn and Toby Chopra)
—Additional files from the Associated Press
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Toronto Star
2 hours ago
- Toronto Star
Orbán's anti-Ukraine campaign targets political rival as Hungary's elections loom
BUDAPEST, Hungary (AP) — As Hungary heads toward national elections next spring and the populist government's popularity slumps, Prime Minister Viktor Orbán has zeroed in on a central theme he hopes will sway voters: an alleged threat posed by neighboring Ukraine. While most European Union countries have offered political, financial, and military support to Kyiv since Russia's full-scale invasion in 2022, Hungary under Orbán has charted a starkly different course — refusing to supply Ukraine with weapons or allow their transit through Hungarian territory, demanding sanctions relief and rapprochement with Russia, and adopting a combative stance toward both Kyiv and its EU backers.
Winnipeg Free Press
2 hours ago
- Winnipeg Free Press
Orbán's anti-Ukraine campaign targets political rival as Hungary's elections loom
BUDAPEST, Hungary (AP) — As Hungary heads toward national elections next spring and the populist government's popularity slumps, Prime Minister Viktor Orbán has zeroed in on a central theme he hopes will sway voters: an alleged threat posed by neighboring Ukraine. While most European Union countries have offered political, financial, and military support to Kyiv since Russia's full-scale invasion in 2022, Hungary under Orbán has charted a starkly different course — refusing to supply Ukraine with weapons or allow their transit through Hungarian territory, demanding sanctions relief and rapprochement with Russia, and adopting a combative stance toward both Kyiv and its EU backers. With his ruling Fidesz party slipping in the polls and a new opposition force gaining momentum, Orbán has escalated a sweeping anti-Ukraine campaign — presenting the upcoming election as a referendum on peace or war. Going further, he has accused his leading political opponent of entering into a treasonous pact with Kyiv to overthrow his government and install a pro-Western, pro-Ukraine administration. Orbán opposes Ukraine's accession to the EU Some of his ideas mirror the growing anti-Ukraine messaging coming from right-wing populists in the West, including from President Donald Trump. 'Let's be under no illusions: Brussels and Ukraine are jointly building up a puppet government (in Hungary),' Orbán said on June 6 in comments to state radio. 'They want to change Hungary's policy toward Ukraine after the next elections, or even sooner.' At the heart of Orbán's claims is Ukraine's ambition to join the EU, something Kyiv believes would place it firmly within the embrace of the West and provide a measure of security against potential Russian attacks in the future. While Orbán was a firm supporter of Ukraine's eventual EU accession shortly after Russia launched its full-scale invasion, he now argues that its membership — which will likely take many years — would flood Hungary with crime, cheap labor, and low-quality agricultural products, threatening national sovereignty and economic stability. He has also spuriously claimed that Brussels and Kyiv intend to force Hungarians to fight Russia on the front lines. On Monday, Orbán posted a video to his social media page depicting animated, artificial intelligence-generated scenes of bloodied, machine-gun wielding Hungarian soldiers engaged in armed conflict, and rows of caskets lined beneath Hungarian flags. 'We don't want our children, in the form of the Hungarian army, to be deployed to the Ukrainian front lines or to Ukrainian territory and to come back in coffins,' he said in the video. Campaign targets the main opposition leader Central to Orbán's life-or-death narrative of the Hungarian election is his growing campaign against his main political rival, Péter Magyar, a former Fidesz insider whose new Tisza party has surged in popularity. Once married to Hungary's former justice minister, Magyar has become the most formidable challenger to Orbán's rule since the EU's longest-serving leader took office in 2010. With Tisza leading Fidesz in most independent polls, some analysts and domestic critics believe Orbán may be laying the groundwork to discredit or even disqualify Magyar ahead of the 2026 election. Péter Krekó, director of the Budapest-based Political Capital think tank, said Orbán's attempt to link Magyar and Tisza to the image of a dangerous Ukraine is aimed at neutralizing his domestic opposition as popular sentiment appears to be turning against him. 'There is an ongoing campaign against any critical voices in Hungary saying that they are agents of Ukraine, and this can be used also against the Tisza party,' he told The Associated Press. 'If you can't win back public opinion anymore, then you can try to use a more authoritarian toolkit.' Beyond political rhetoric, such accusations have reached the highest levels of diplomacy. In May, Ukraine's main security agency said that it had arrested two people on suspicion of spying for Hungary by gathering intelligence on Ukraine's military defenses in the west of the country. That set off a tit-for-tat series of diplomatic expulsions, and accusations from Hungary's government that the affair was part of a concerted Ukrainian campaign involving Magyar and his party to undermine Orbán. The prime minister accused Magyar and Tisza of being 'pro-Ukrainian' and supporting Ukraine's EU bid, and alleging that a prominent Tisza member, the former chief of staff of the Hungarian military, has 'deep ties with Ukrainian intelligence.' No evidence has been provided to support the claims, which Magyar has dismissed outright. 'It is outrageous and blood-boiling when a patriot who trained and prepared to be a soldier since the age of 14 and who took a military oath … is accused of treason by people who would sell their country out,' Magyar told a news conference on June 5. Ukraine pushes back To reinforce its message, the Hungarian government launched a state-funded communication blitz in March, accompanied by a non-binding 'national consultation' on Ukraine's EU membership. Billboards, television ads, and social media posts have flooded the country, portraying Ukrainian President Volodymyr Zelenskyy and European Commission President Ursula von der Leyen as the architects of a plot to undermine, or even destroy Hungary. 'They would bring Ukraine into the EU, but we would pay the price!' reads one poster. 'Let's vote no!' Ukrainian officials have been restrained in reacting to the Hungarian campaign. But in an interview published last week in Hungarian outlet Válasz Online, Zelenskyy criticized the government's use of his face as part of its media barrage, and accused Orbán of being 'anti-Ukrainian and anti-European.' 'He is using this in his domestic policy: he wants to turn the war in Ukraine to his own advantage in the elections. That is dishonest,' Zelenskyy said. In a post on X on Tuesday, Ukraine's foreign ministry also pushed back on Hungary's accusations. 'The Hungarian government's communication line, which demonizes Ukraine and President Zelenskyy, has gone off the rails,' the ministry's spokesman, Heorhii Tykhyi, wrote. 'We don't see Hungary demanding that Russia accept a ceasefire … They remain silent when principled action is needed and make baseless accusations when diplomacy is required.'
Winnipeg Free Press
4 hours ago
- Winnipeg Free Press
10 years after Europe's migration crisis, the fallout reverberates in Greece and beyond
LESBOS, Greece (AP) — Fleeing Iran with her husband and toddler, Amena Namjoyan reached a rocky beach of this eastern Greek island along with hundreds of thousands of others. For months, their arrival overwhelmed Lesbos. Boats fell apart, fishermen dove to save people from drowning, and local grandmothers bottle-fed newly arrived babies. Namjoyan spent months in an overcrowded camp. She learned Greek. She struggled with illness and depression as her marriage collapsed. She tried to make a fresh start in Germany but eventually returned to Lesbos, the island that first embraced her. Today, she works at a restaurant, preparing Iranian dishes that locals devour, even if they struggle to pronounce the names. Her second child tells her, ''I'm Greek.'' 'Greece is close to my culture, and I feel good here,' Namjoyan said. 'I am proud of myself.' In 2015, more than 1 million migrants and refugees arrived in Europe — the majority by sea, landing in Lesbos, where the north shore is just 10 kilometers (6 miles) from Turkey. The influx of men, women and children fleeing war and poverty sparked a humanitarian crisis that shook the European Union to its core. A decade later, the fallout still reverberates on the island and beyond. For many, Greece was a place of transit. They continued on to northern and western Europe. Many who applied for asylum were granted international protection; thousands became European citizens. Countless more were rejected, languishing for years in migrant camps or living in the streets. Some returned to their home countries. Others were kicked out of the European Union. For Namjoyan, Lesbos is a welcoming place — many islanders share a refugee ancestry, and it helps that she speaks their language. But migration policy in Greece, like much of Europe, has shifted toward deterrence in the decade since the crisis. Far fewer people are arriving illegally. Officials and politicians have maintained that strong borders are needed. Critics say enforcement has gone too far and violates fundamental EU rights and values. 'Migration is now at the top of the political agenda, which it didn't use to be before 2015,' said Camille Le Coz Director of the Migration Policy Institute Europe, noting changing EU alliances. 'We are seeing a shift toward the right of the political spectrum.' A humanitarian crisis turned into a political one In 2015, boat after boat crowded with refugees crashed onto the doorstep of Elpiniki Laoumi, who runs a fish tavern across from a Lesbos beach. She fed them, gave them water, made meals for aid organizations. 'You would look at them and think of them as your own children,' said Laoumi, whose tavern walls today are decorated with thank-you notes. From 2015 to 2016, the peak of the migration crisis, more than 1 million people entered Europe through Greece alone. The immediate humanitarian crisis — to feed, shelter and care for so many people at once — grew into a long-term political one. Greece was reeling from a crippling economic crisis. The influx added to anger against established political parties, fueling the rise of once-fringe populist forces. EU nations fought over sharing responsibility for asylum seekers. The bloc's unity cracked as some member states flatly refused to take migrants. Anti-migration voices calling for closed borders became louder. Today, illegal migration is down across Europe While illegal migration to Greece has fluctuated, numbers are nowhere near 2015-16 figures, according to the International Organization for Migration. Smugglers adapted to heightened surveillance, shifting to more dangerous routes. Overall, irregular EU border crossings decreased by nearly 40% last year and continue to fall, according to EU border and coast guard agency Frontex. That hasn't stopped politicians from focusing on — and sometimes fearmongering over — migration. This month, the Dutch government collapsed after a populist far-right lawmaker withdrew his party's ministers over migration policy. In Greece, the new far-right migration minister has threatened rejected asylum seekers with jail time. A few miles from where Namjoyan now lives, in a forest of pine and olive trees, is a new EU-funded migrant center. It's one of the largest in Greece and can house up to 5,000 people. Greek officials denied an Associated Press request to visit. Its opening is blocked, for now, by court challenges. Some locals say the remote location seems deliberate — to keep migrants out of sight and out of mind. 'We don't believe such massive facilities are needed here. And the location is the worst possible – deep inside a forest,' said Panagiotis Christofas, mayor of Lesbos' capital, Mytilene. 'We're against it, and I believe that's the prevailing sentiment in our community.' A focus on border security For most of Europe, migration efforts focus on border security and surveillance. The European Commission this year greenlighted the creation of 'return' hubs — a euphemism for deportation centers — for rejected asylum seekers. Italy has sent unwanted migrants to its centers in Albania, even as that faces legal challenges. Governments have resumed building walls and boosting surveillance in ways unseen since the Cold War. In 2015, Frontex was a small administrative office in Warsaw. Now, it's the EU's biggest agency, with 10,000 armed border guards, helicopters, drones and an annual budget of over 1 billion euros. On other issues of migration — reception, asylum and integration, for example — EU nations are largely divided. The legacy of Lesbos Last year, EU nations approved a migration and asylum pact laying out common rules for the bloc's 27 countries on screening, asylum, detention and deportation of people trying to enter without authorization, among other things. 'The Lesbos crisis of 2015 was, in a way, the birth certificate of the European migration and asylum policy,' Margaritis Schinas, a former European Commission vice president and a chief pact architect, told AP. He said that after years of fruitless negotiations, he's proud of the landmark compromise. 'We didn't have a system,' Schinas said. 'Europe's gates had been crashed.' The deal, endorsed by the United Nations refugee agency, takes effect next year. Critics say it made concessions to hardliners. Human rights organizations say it will increase detention and erode the right to seek asylum. Some organizations also criticize the 'externalization' of EU border management — agreements with countries across the Mediterranean to aggressively patrol their coasts and hold migrants back in exchange for financial assistance. The deals have expanded, from Turkey to the Middle East and across Africa. Human rights groups say autocratic governments are pocketing billions and often subject the displaced to appalling conditions. Lesbos still sees some migrants arrive Lesbos' 80,000 residents look back at the 2015 crisis with mixed feelings. Fisherman Stratos Valamios saved some children. Others drowned just beyond his reach, their bodies still warm as he carried them to shore. 'What's changed from back then to now, 10 years on? Nothing,' he said. 'What I feel is anger — that such things can happen, that babies can drown.' Those who died crossing to Lesbos are buried in two cemeteries, their graves marked as 'unknown.' Tiny shoes and empty juice boxes with faded Turkish labels can still be found on the northern coast. So can black doughnut-shaped inner tubes, given by smugglers as crude life preservers for children. At Moria, a refugee camp destroyed by fire in 2020, children's drawings remain on gutted building walls. Migrants still arrive, and sometimes die, on these shores. Lesbos began to adapt to a quieter, more measured flow of newcomers. Efi Latsoudi, who runs a network helping migrants learn Greek and find jobs, hopes Lesbos' tradition of helping outsiders in need will outlast national policies. 'The way things are developing, it's not friendly for newcomers to integrate into Greek society,' Latsoudi said. 'We need to do something. … I believe there is hope.' ____ Brito reported from Barcelona, Spain. AP journalists Petros Giannakouris in Lesbos and Theodora Tongas in Athens contributed.
