In Russia, a slowdown in economic activity has been recorded in its regions during December 2024 – January 2025.
The causes include accelerated inflation, reduced lending volumes, relocation of light industry enterprises to Central Asian countries, or the cessation of their activities due to workers transferring to defense industry enterprises or low demand for their products.
Key aspects of the economic situation in Russian regions during December 2024 – January 2025:
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Inflation rates are high. Almost all regions saw price increases for meat products, household appliances, electronics, and foreign tourism services. Producers raised prices due to limited access to Western goods and high domestic demand.
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A trend of slowing business activity indicators. Businesses assess the external environment as unfavorable. Additionally, some sectors of industry and construction noted declines in production volumes and demand in the domestic market.
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The pace of lending to businesses and households slowed down due to high levels of debt among both. In December 2024, consumer credit debt stood at 4%. The highest personal debt was recorded in the Southern Federal District (9%), and the lowest in the Far Eastern Federal District (0.7%). The Southern Federal District also had the highest corporate debt (33%).
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The deterioration of economic indicators in the regions indicates growing risks for businesses and a deepening banking crisis due to increasing credit burdens. If Western sanctions remain in place and the Russia-Ukraine war continues into 2025, economic activity in Russia will continue to slow down.
