Even warmer: Putin urged to prevent hypothermia of the economy

Experts report risks of excessive cooling of the economy and even recession, but the Bank of Russia is monitoring the situation, Vladimir Putin said on August 12 at a meeting on these issues. The President urged not to allow the situation to worsen and added that this year the government and the Central Bank of the Russian Federation face the task of returning the economy to the path of balanced growth. In Russia, inflation continues to decline, it reached 8.8% in July, and unemployment is almost at a historic low.

In Russia, the rate of price growth is decreasing

The Government and the Central Bank are taking measures to return the Russian economy to the path of balanced growth. This implies a slowdown in price growth while keeping unemployment at a consistently low level. The inflation rate has been consistently decreasing for several months in a row.

"If by the end of March it was 10.3% in annual terms, then at the end of June it was already 9.4%, and by the end of July it was already 8.8%,— the president noted.

At the same time, according to the estimates of the Central Bank, the dynamics of consumer prices by the end of the year may be at the level of 6-7%, which will be slightly lower than earlier forecasts. To further slow down inflation, monetary conditions must remain tight, Natalia Milchakova, a leading analyst at Freedom Finance Global, told Izvestia.

— The Central Bank will continue to reduce the key rate, but it will do so slowly and cautiously. We expect that by the end of 2025 it will fall to at least 16% per annum, while inflation will slow down to 7.5-8%, the expert believes.

A decrease in inflation will have a positive effect on GDP growth, and ordinary Russians will be the main beneficiary of this, Georgy Ostapkovich, research director of the HSE Center for Economic Studies, told Izvestia.

The number of hidden unemployment is growing

The unemployment rate in Russia is 2.2%, remaining at an almost historical low. At the same time, according to the estimates of the Central Bank, the share of enterprises with a shortage of personnel is decreasing. Despite this, there is an increase in the number of hidden unemployment in the country, that is, personnel who are in the so-called idle, part-time workers or those who are at risk of dismissal, Vladimir Putin noted. At the beginning of 2025, there were about 98 thousand people, at the end of June - 153 thousand, and on August 8 — 199 thousand people.

The President also drew attention to a slight increase in the registered unemployment rate. At the beginning of 2025, it was 274 thousand people, at the end of June - 291 thousand people, at the beginning of August — 300 thousand people.

"Nevertheless, we must feel the trends, catch them and react accordingly to prevent, as we said at the beginning of the year, 'hypothermia,'" Putin said.

He warned that many experts are talking about the risks of an excessive cooling of the economy and even a recession, but the Central Bank monitors and evaluates the situation, works directly with enterprises and does not see big risks. Cooling implies a decrease in economic growth, which is now confirmed by Rosstat data, explains Ostapkovich. At the same time, a recession should be understood as a decline in the economy into a negative zone within six months.

— The metallurgical industry is actually already in recession, the steel industry is experiencing the most serious difficulties, the coal industry is not doing well, the retail trade has slowed down to 3% in annual terms, and there are many segments in purely civilian sectors of the economy that require special attention, — notes Natalia Milchakova.

If these trends worsen and no measures are taken to counteract the recession, Russia faces GDP growth of no more than 1% this year, the expert says. Although today the Central Bank is already lowering the key rate in order to provide businesses with the necessary financing, and the government is thinking about new measures to support the most important industries through tax incentives. So, in July 2025, the president instructed the government and the Central Bank to take measures to maintain production in the manufacturing industry at least at the level of last year. Earlier, Putin also signed a law on tax benefits for organizations in the electronics industry until 2027.

"I ask my colleagues from relevant ministries and departments, from the regions, to be in constant contact with business associations, with the business community, to help solve emerging problems, to respond to requests from enterprises, companies, and their labor collectives," the president addressed his colleagues.

How Putin assessed the state of the Russian budget

The Cabinet of Ministers has begun preparing the federal budget from 2026 to 2028, Vladimir Putin said. In the future, it will need to be coordinated with the parliament and the leading factions.

The president called the current state of the federal treasury stable. So, in January-July 2025, the growth of oil and gas revenues amounted to 14% year-on-year, they reached 14.8 trillion rubles. Turnover tax revenues increased by 6.7% over the same period compared to the same period in 2024, while VAT revenues increased by 6.9%.

In July, the federal budget deficit increased by another 1.2 trillion rubles and amounted to 4.9 trillion rubles in seven months. At the same time, according to the Ministry of Finance, in 2025 the shortage is planned to amount to 3.8 trillion rubles, which will amount to 1.7% of GDP. If it can be kept at this level, it means that the government really has no big problems with the budget, Natalia Milchakova believes.

— A lot of developed countries live with a deficit. America has had both budget and trade deficits since about 2002. Well, nothing, no one dies there, and access to healthcare, and incomes are high. But, of course, it is desirable, according to economic theory, to work without a deficit," says Grigory Ostapkovich.

At the same time, due to a shortage in the treasury, if it is necessary to finance some major project, there may not be enough money, independent expert Andrei Barkhota told Izvestia.

As the Central Bank's deputy chairman Alexei Zabotkin stated earlier, answering questions from readers of the regulator's official Telegram channel, the growth of the federal budget deficit does not inspire the Central Bank with concerns. He recalled that the main source of financing for the shortage this year is borrowing.:

— The Ministry of Finance is now successfully placing federal loan bonds, slightly ahead of the pace required to implement the program. Plus, income from progressive personal income tax should accelerate by the end of the year.

According to the deputy chairman of the Central Bank, the Ministry of Finance does not need to spend the National Welfare Fund to cover the entire deficit, the fund is used only for the part related to low oil prices.