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This must be the propaganda you’re used to since you don’t have access to quality western education anymore
Anyhoo, Russias economy is growing because it’s on an unsustainable war footing, they recently raised their interest rates to 21% the highest in history and have an inflation of 8.5%
Central Bank raises rates two percentage points to record 21%
At Friday’s board meeting the Central Bank hiked interest rates by two percentage points to 21%. That’s the highest level in modern Russian history. And that’s not the end: the Central Bank indicated the rate could go even higher.
- “Inflation is significantly higher than the Bank of Russia’s June forecast. Inflationary expectations continue to increase. The growth of domestic demand significantly outpaces the scope to expand the supply of goods and services. Additional budget expenditures and the associated deficit in the 2024 Federal Budget also have a pro-inflationary effect,” the Central Bank in a statement.
- This level of interest rate is unprecedented. Even in the days after Russia’s full-scale invasion of Ukraine in February 2022, rates went no higher than 20%. Most economists expected a rate rise at this Friday’s meeting, but most thought it would go no higher than 20%.
- The main reason for the decision was recent clarity about state spending plans for 2024 and 2025 (the 2024 deficit is expected to be 3.3 trillion rubles or 1.7% of GDP, compared with a planned 0.9%). And inflation shows no sign of slowing.
- In its press release the Central Bank stated that it: “allows for the possibility of raising the base rate at the next meeting.” Based on the Central Bank’s forecast for the average rate at the end of the year (21-21.3%), it is prepared to contemplate a rate rise to 23% at December’s meeting (the final one of the year).
- The Central Bank now believes that inflation in 2024 will be 8-8.5% (compared with its previous forecast of 6.5-7%). This wasn’t a surprise for economists, following 11.1% seasonally adjusted price growth in the third quarter. Inflationary expectations, which the bank monitors closely, went up from 12.5% to 13.4% across the entire range of respondents in the most recent October survey.
- Despite sky high rates, the regulator also has higher expectations for lending growth: from 10-15% to 17-20% in the corporate sector, and from 10-15% to 12-15% for consumer borrowing. Corporate loans increased by 2% month-on-month in September, according to the Central Bank. And Over the nine months of 2024 they were up 14.5%. Given the high rate, businesses prefer loans at floating rates rather than fixed rates. At the same time, subsidized loans make up about 8% of GDP — roughly the same as government military spending. Of course, it’s worth remembering that the defense sector is one of the biggest preferential borrowers. This all illustrates the “prisoner’s dilemma” – a principle from game theory in which, using uncoordinated strategies, the best decision for one individual leads to a suboptimal outcome for the entire group, weakening the collective position.
- Of course, the danger of keeping interest rates high for a long period of time is that debt-laden enterprises sensitive to interest rates will be unable to refinance their loans and will go bankrupt.
- At the same time, the government is increasing spending, including via subsidies on business loans, which is fueling inflation. The result is a strange phenomenon: the Central Bank, responsible for inflation, needs to raise interest rates to slow price increases. But government spending is making inflation worse.
Central Bank hikes rates to 21%
Hello! Welcome to your weekly guide to the Russian economy—written by Alexandra Prokopenko and Alexander Kolyandr and brought to you by The Bell. Our top story is the Central Bank’s decision to hike interest rates to a record 21%. We also look at the IMF’s upgrade ofen.thebell.io
For reference, the German economy during world war 2.
Notice how it was growing even when it was losing the war? That’s because defense spending and arms production raises GDP. It’s not a true indicator of economic health and if any western country was walking around with 21% interest rates, 8.5% inflation and a million caskets for 10 miles of empty villages there would be rioting in the streets.
We in the west are just lucky Russia and their allies are such dumbassss.
The gripe is you posting misinformation and not understanding economics. You want to argue the points about why having 8.5% inflation and 21% interest rates is going to kill a country that is already set to lose a quarter of its population due to low birth rates or do you want to continue to post kremlin babble?
I posted an article on the Russian economy growing inspite of sanctions which don’t benefit Europe and you babble about American versus Russian consumer resilience. Now are you going to address this :
I don’t understand this? Are you saying it’s someone’s fault that Russia decided to reduce a quarter of Ukraine to ashes and then deport the survivors to Russian camps? Are you ok orc?
It’s great for Europe.The west learning to ditch energy reliance on genocidal dictatorships is good actually. If Germany had disconnected from Russia when the US told them we would be in any even better position today.
www.statista.com
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kyivindependent.com
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I posted an article - that showed growth in spite of sanctions and Western Europe suffering for it. That's it.You posted an article, basically a headline, that didn’t tell the whole story then walked away like you said something important because you are a kremlin agent that hates the west. And I educated you on how economics actually works.
For instance
Now would we say Ukraines economy is all roses and daffodils? No. But unlike you or a they aren’t running a 21% interest rates and 8.5% inflation and can look forward to western investment by the billions. What do you Orcs have to look forward to?
I don’t understand this? Are you saying it’s someone’s fault that Russia decided to reduce a quarter of Ukraine to ashes and then deport the survivors to Russian camps? Are you ok orc?
It’s great for Europe.The west learning to ditch energy reliance on genocidal dictatorships is good actually. If Germany had disconnected from Russia when the US told them we would be in any even better position today.
The west is intelligent and innovative, you orcs aren’t. We will survive you won’t.
The overwhelming majority of UK and Germany are in favor of current measures against Russia including greater military spending to counter Russia and military assistance to Ukraine
Britain public opinion on measures to support Ukraine 2023 | Statista
Public support for sending more weaponry and supplies to Ukraine varies significantly across European countries, according to a survey conducted in February 2023, around one year after the Russian invasion of Ukraine.
ISD Surveys: What do Germans think about Ukraine and Defence Policy?
This Dispatch analysis the findings of two ISD surveys which explored Germans views on the war against Ukraine, (European) defence, and threat perceptions of Russia.www.isdglobal.org
You see the majority of the west knows what you really are. You ain’t fooling nobody. Time is going to run out soon for you.
And I explains why it’s growing. You can either take this free education in economics or continue to be a Russian asset. Your choice.
Orc babble. The US literally covers Europes defense spending and guarantees its borders. It’s the most fortuitous relationship on the planet.
www.businessinsider.com
euromaidanpress.com
markets.businessinsider.com
www.forbes.com
mil.in.ua
asiatimes.com
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