Russian Economic Development Minister Maxim Reshetnikov on Thursday warned that the country was close to recession and criticised the policies of the central bank as causing a collapse in investment.

Speaking at the St Petersburg International Economic Forum, Mr Reshetnikov said, “According to the data, we have a cooling off. According to current business sentiment, we are on the threshold of a transition to a recession.’’

The interest rate level set by the Central Bank of Russia was demotivating business investment, he said.

The CBR recently cut its key rate marginally from 21 per cent to 20 per cent, and Mr Reshetnikov predicted that investment in the third and fourth quarters could be below the levels reached in 2024.

CBR governor Elvira Nabiullina rejected allegations that the bank’s monetary policy was wrong, but she also predicted difficulties ahead.

The Russian economy had grown for two years despite sanctions, thanks to import replacement programmes based on spending from the welfare fund and existing capital reserves in the banking system, she said.

“We have to understand that many of these resources have, in fact, been used up, and we have to think about a fresh growth model,” Ms Nabiullina added.

Since the full-scale invasion of Ukraine in February 2022, the Russian economy has largely been based on massive rearmament and military expenditure. 

(dpa/NAN)