Economic Development Ministry sees slight slowdown in Russia's economic growth at start of year - deputy minister

YEKATERINBURG. Feb 27 (Interfax) - The Economic Development Ministry has observed a slight slowdown in Russia's economic growth at the beginning of 2025 due to the high key interest rate, mainly affecting industries focused on consumer demand and exports, Deputy Economic Development Minister Denis Tyupyshev said when speaking at the Big Open Dialogue investment forum in Yekaterinburg on Thursday.

"We are currently in a period of managed economic cooling, seeking a balance between curbing inflation and ensuring economic growth. GDP growth rates in the fourth quarter were slightly lower, and at the beginning of the year we see a slight slowdown. The slowdown is mainly occurring in industries oriented towards domestic consumer demand and exports," he said.

"This is all happening amid a rather tight monetary policy pursued by the Central Bank of Russia. It is primarily due to the high key rate and the tightening of macroprudential regulation. We are seeing a certain decline in the growth rates of consumer and corporate lending. This creates the necessary conditions for a fall in prices, but inevitably may also lead to economic deceleration," he said.

The main risk in the near future is a slowdown in investment, he said.

"Companies are beginning to optimize their investment programs, postponing them. This is a result of reduced internal funds, partly declining profitability, and high deposit rates as an alternative to investing," he said.

In addition, costs in the economy are rising, he said.

"All this creates risks for companies' financial stability," he said. The authorities understand this, which is why the subcommission on strengthening the financial sector and individual industries was reinstated at the end of last year. The monitoring system includes 2,163 systemically important organizations, he said.