Overview

• Economy Minister Maxim Reshetnikov said at the St. Petersburg International Economic Forum that indicators show Russia is “on the verge” of slipping into a recession.
• Inflation has eased slightly since peaking after the 2022 invasion but remains stubbornly high at about 10%, putting pressure on households.
• On June 6, the Central Bank cut its key interest rate from 21% to 20%—its first rate reduction since 2022—and officials are divided over deeper cuts to revive lending.
• The labor market is strained by an estimated 2.6 million-worker shortfall, driven by military mobilization and a brain drain of young professionals.
• Defense spending has risen to roughly $130 billion, around one-third of the federal budget, as Western sanctions limit oil, gas and financial revenues.