The Russian Federation is experiencing serious economic difficulties caused by a combination of internal problems and external pressures. Inflation reached 9.3% by the end of 2024, far exceeding the projected 4.5%, prompting the Central Bank to raise the key interest rate to 21% per annum. This move has led to increased credit costs and reduced consumer demand, reports the Baltimore Chronicle with reference to the foreign intelligence service of Ukraine.
The ruble has dropped below 100 per U.S. dollar, a result of falling export revenues, declining oil prices, and international sanctions. Revenues from fossil fuel exports have decreased for the sixth consecutive month, dropping to €618 million per day in September 2024. Imports have also declined—falling by 7.8% between January and July 2024, amounting to $153.1 billion.
Labor shortages have reached a critical level: 73% of enterprises report insufficient workforce, while unemployment has dropped to a historical low. This shortage negatively affects production and drives up wage costs.
Military expenditures are rapidly increasing. In 2024, nearly 40% of the state budget was allocated to defense and law enforcement. This creates additional pressure on the economy and limits resources for other sectors.
The coal industry crisis is also affecting Russia’s transport system: more than 295,000 freight cars remain idle due to a lack of cargo, paralyzing railway operations.
Overall, the Russian economy is facing a set of compounding problems that require urgent solutions to prevent further deterioration.
Earlier we wrote that NBU raises dollar and euro rates for May 5.