Putin's economic worries mount as Trump pushes for peace
President Vladimir Putin has expressed concerns about the state of the Russian wartime economy, which is grappling with inflation, labor shortages, and high interest rates. Meanwhile, new U.S. President Donald Trump is advocating for a negotiated end to the conflict in Ukraine, reports Reuters.
Despite robust growth in Russia's GDP during 2023–2024, projections for 2025 suggest an economic slowdown, with an expected growth rate of less than 1.5 percent. Record high wartime expenditures, reaching 6.3 percent of GDP in 2025, along with inflation nearing double-digit figures, are weighing heavily on the Russian economy.
Furthermore, interest rates at 21 percent are hindering access to credit, causing concern among entrepreneurs and investors, notes Reuters.
Trump pushes for conflict resolution
Donald Trump, the newly elected President of the United States, has announced a commitment to swiftly resolve the conflict in Ukraine. He suggests that without negotiations with Russia, his administration will implement additional sanctions and tariffs to put pressure on the Kremlin.
Vladimir Putin, while valuing the efforts of his economic officials, has increasingly highlighted high loan costs and an overheated economy as key challenges to be addressed, reports Reuters.
Record wartime expenditures are limiting investment opportunities in non-defense sectors. Although Putin asserts a willingness to continue the conflict as long as necessary, the growing economic toll of war is amplifying calls for a diplomatic solution. The critics include both entrepreneurs and segments of the Russian political elite.
Kremlin spokesman Dmitry Peskov describes the economic situation as stable, although he acknowledges that problems are being felt. Elvira Nabiullina, head of the Central Bank of Russia, defends the high interest rates by emphasizing the necessity of combating inflation driven by massive wartime spending. At the same time, rising pressure for changes in monetary policy might influence the authorities' future decisions.
While the Kremlin has not yet received concrete negotiation proposals publicly, upcoming actions by the Trump administration may compel Russia to seek diplomatic solutions. As the costs of war become increasingly apparent, the pressure to end the conflict is likely to intensify, the report concludes.
