Vienna [Austria], July 2: High interest rates, Ukrainian attacks and internet shutdowns have pushed the Russian economy into crisis, according to the Vienna Institute for International Economic Studies (wiiw).
Economic growth will reach only 0.6% this year, after 4.9% in 2024 and 1% in 2025, according to the institute's latest forecast looking at Central and Eastern European economies.
The "pronounced economic stagnation" was due to "the central bank's still excessively restrictive monetary policy, which is choking economic activity by making borrowing prohibitively expensive, particularly for the purchase of consumer durables and for investment," said Vasily Astrov, Russia expert at wiiw. Investment activity collapsed by 14% in the first quarter, he said.
Ukrainian attacks on Russian energy facilities and the resulting problems with fuel supplies were also harming the economy, Astrov said. Internet shutdowns were causing additional problems in the highly digitized economy, it said.
For Ukraine, the experts forecast growth of 1% this year and 2.5% next year.Ukraine was suffering not only from attacks on its energy facilities but also from the effects of the Iran war, it said.
Source: Qatar Tribune
