Economic issues in Russia will worsen in 2025 due to increased military spending and the ongoing impact of sanctions.
This is reported by the UK Ministry of Defence on X (Twitter).
According to the report, the Central Bank of Russia (CBR) raised the key interest rate to 21% on October 25. This is the highest rate since the beginning of the war, reflecting the CBR’s concerns about the growing inflationary pressure in the Russian economy.
Elvira Nabiullina, the head of the CBR, stated that more "radical changes" in monetary policy might be required to control inflation. However, key executives in many sectors of the Russian economy have increasingly criticized the CBR’s decision to maintain high interest rates.
According to British intelligence, high interest rates in the Russian economy are likely to limit investment and business growth.
Since the beginning of the war in 2022, the volume of corporate loans and their share tied to the CBR’s key rate has increased. As a result, higher interest rates have led to an increase in the cost of debt. These expenses are likely to exacerbate financial pressure on businesses, with corporate bankruptcies in Russia in 2024 reportedly 20% higher than in 2023.
