Russian economy stumbles as inflation soars and ruble dips

Signs of a rapid deterioration in Russia's economic situation are increasing. This is acknowledged by the leaders of Russian companies, even those closely aligned with the Kremlin, according to the Parisian daily. The International Monetary Fund (IMF) forecasts a decrease in Russia's economic growth, predicting it will fall to 1.3 percent of GDP by 2025.

"The central bank rate is 2.5 times higher than inflation, yet it’s still not coming down," assesses Alexey Mordashov, head of the mining and metallurgical company Severstal. "It seems the cure is more harmful than the disease."

Sberbank's head, German Graf, highlighted the challenges facing the economy, warning that it may not endure for much longer as evident signs of a slowdown emerge.

Sergei Chemezov, who leads Rostec, a central figure in the industrial-military sector according to Le Monde, expressed concern that rising interest rates are significantly hindering growth in the industrial sector. He warned that maintaining this approach could lead to the collapse of most enterprises.

An anonymous member of the Russian business community shared with Le Monde that the economic situation is precarious, with warnings being directed at the Kremlin that, while the economy is currently stable, it cannot sustain itself for much longer. They emphasized the urgency of resolving the conflict in Ukraine swiftly.

However, if a truce were to occur, the political elite would realize that it is a solution far from the Kremlin's initial goal, and it could spell trouble for the regime. "The facade is fragile! We saw this during Yevgeny Prigozhin's rebellion," continues the newspaper's source.

U.S. President-elect Donald Trump has allowed reports to surface in the media suggesting that he will soon visit Moscow to sign an agreement that would effectively force Kyiv into territorial concessions but would freeze the conflict. The Kremlin has not responded with any indication that it is interested in a truce, reminds "Le Monde".

A European diplomat in Moscow tells the newspaper that, for now, Vladimir Putin "is sticking to his fundamental principles" and makes it clear that peace will only be made on his terms.

In the weeks ahead, Putin will monitor Trump closely to assess the state of American military support for Ukraine. Meanwhile, he confronts significant challenges within Russia, including sanctions and their growingly concerning consequences on the economy, as noted by the diplomat.

Thierry de Montbrial, president of the World Policy Conference, predicts that the Russian leader will closely observe Trump for several months. It would be in the Kremlin's interest to avoid mobilization and economic collapse, but "Putin is not in a hurry."

Yevgeny Prigozhin, head of the Wagner Group, a mercenary organization, died on August 23 in a plane crash under unexplained circumstances. It is believed that this crash was Putin's retaliation for Prigozhin's and the Wagner Group's rebellion in June.

On June 24, Wagner forces took over the headquarters of the Russian army in Rostov-on-Don and then began moving toward Moscow. Prigozhin demanded "restoration of justice" in the army and the removal of Defense Minister Sergey Shoygu. That same evening, however, he announced a retreat and the withdrawal of mercenaries to field camps to "avoid bloodshed."