Putin concerned about the state of the Russian economy: elites want peace - media.

Russian President Vladimir Putin has expressed concerns about the state of his country's economy. The Russian elite believes that the war needs to be concluded through negotiations.

According to Reuters, tensions in the Russian economy are rising due to a lack of workforce and high interest rates, which were set to combat rising inflation caused by significant defense expenditures. The Russian elite is discussing the possibility of peace negotiations.

'Russia certainly has an economic interest in a diplomatic resolution of the conflict,' said Oleg Vyugin, former deputy head of the Central Bank of Russia, pointing to the risk of increasing economic disparities as defense spending rises.

Previously, the Russian economy, which has a volume of $2.2 trillion, demonstrated resilience during the war, and Putin praised the ingenuity of senior officials and businessmen who managed the harshest Western sanctions.

Economic Problems

After a contraction in GDP in 2022, the economy grew faster than in the European Union and the United States in 2023 and 2024. However, according to reports from the Central Bank and the International Monetary Fund, less than 1.5% growth is expected this year, although the government hopes for higher figures.

Despite the Central Bank's increase in the base interest rate to 21% in October, inflation remains high.

Putin acknowledged that 'we have problems, including inflation, which is undermining the economy,' and has already tasked the government and the Central Bank with reducing the pace of increase.

Defense Spending and Wages

This year, Russia allocated a record third of its budget to defense - 6.3% of GDP, which has contributed to inflation. Along with a workforce shortage due to the war, this has led to an increase in wages. In addition, the government is trying to increase tax revenues to reduce the budget deficit.

High Interest Rates

According to Vyugin, consistently high interest rates are squeezing the balances of businesses and banks. Putin also expressed his dissatisfaction with the reduction of private investments due to the high cost of loans.

Low coal prices and high interest rates have led the Russian coal and steel producer 'Mechel' to announce a restructuring of its debt.

Some of the most prominent Russian businessmen ridicule the high interest rates.