The development of a military economy in the Russian Federation has reached its peak - Bloomberg

"The peak of growth was passed, most likely in the middle of this year. What will be the trajectory of growth next year, the question remains - whether it will be" soft "or" rigid "landing for the economy," said Oleg Kuzmin, economist Renaissance Capital in Moscow. Military production in the Russian Federation continues to grow, but not enough to compensate for the fall in other sectors of the economy, according to the Finland Bank Institute.

Also the other day, the International Monetary Fund has worsened its forecast for Russia's economy and now sees growth in 2025 at 1. 3% against 1. 5% earlier. The slowdown in economic indicators outside the military-industrial sector emphasizes the continuation of Russia's consolidation in a military economy. In 2023, the country quickly recovered from recession after the invasion, expanding its economy by 3. 6% annually due to the costs associated with defense.

Experts now suggest that an increase in military production can occur at the expense of civilian sectors. Thus, industrial production in September increased by 3. 2% in the annual calculation compared to 2. 7% in August. The Russians are already faced with interest rates at the crisis level, and the central bank can increase its control indicator to 20% - the same level as within weeks after the start of the invasion - trying to curb inflation.

Any downturn in the economy can end consumers on economic pain, from which they were mostly protected against the background of punitive measures that the US and their allies continue to apply. "Indicators indicate that the growth of the Russian economy caused by fiscal impulses has reached its peak. Construction and transport services have been declined since the beginning of 2024, as mortgage loans began to increase sharply, while transport has encountered capacity restrictions.

Military production continues to expand , but since May, it cannot compensate for the fall in the sectors caused by "civil demand", as a result of which the total industrial production remained unchanged, " - commented Alexei Isakov, a Russian economist. It is noted that recently production growth has slowed down, and to save it, an increase in investments is needed, but this is unlikely, given the excessively high level of discount rate of the Central Bank of the Russian Federation.