A leading economist has highlighted that wage hikes and cash handouts in Russia are not signs of economic vitality but rather indicators of an economy under strain. Businesses are closing, and banks are at risk, suggesting artificial support mechanisms.
In 2024, wages increased by nearly 18%, driven by conscription and citizens fleeing to avoid participation in Vladimir Putin's conflict. The resulting labor shortage has forced employers to offer higher wages to attract staff.
Consumer prices have risen, with a 9.5% year-on-year increase in December 2024, up from 8.9% the previous month. The economist notes that the cost of fruit and vegetables has surged by 20%, impacting citizens amid the ongoing conflict in Ukraine.
The government has introduced measures such as cash handouts, military enlistment bonuses, and compensation for families of those killed in combat to offer temporary relief. Interest rates have reached a record 21%, affecting the country's debt payments. Despite low debt levels, this remains manageable for now.
The Russian Central Bank's decision to maintain high interest rates in December surprised many, with domestic business leaders criticizing Governor Elvira Nabiullina for hindering the economy and war efforts. Sergei Chemezov, head of defense and industrial giant Rostech and an ally of Putin, expressed concern: "Today, investment programs have practically come to a standstill."
Source: Daily Express