Russian Central Bank Governor Nabiullina says last reserves of Russian economy have been exhausted
The reserves of labor and production capacity in the Russian economy are almost exhausted.
This was stated by the head of the Central Bank of the Russian Federation Elvira Nabiullina at a press conference, Censor.NET reports with reference to LigaBusinessInform.
According to her, the economy is now in a state of "overheating", the scale of which has become a record for at least the last 16 years.
While Russian GDP is growing by 5% due to trillion-dollar injections into arms production, inflation is accelerating at the same time: the price growth rate in July exceeded 9% year-on-year, the highest since February 2023.
"This suggests that the economy is still in a state of significant overheating. At the same time, businesses have virtually no room to increase their output of goods and services. The shortage of personnel and production facilities could lead to a situation where economic growth slows down despite all attempts to stimulate demand. In fact, this is a stagflation scenario, and it will be possible to stop it only at the cost of a deep recession," Nabiullina said.
According to the head of the Central Bank of the Russian Federation, to prevent such a scenario, the Central Bank decided to raise the key policy rate again, which was already at its highest level since the first months of the war.
"Although the supply of goods and services will continue to expand, it will not happen as fast as the demand is growing now," Nabiullina warned.
According to the new forecast, by the end of the year, inflation in Russia will be 6.5-7.0%, not 4.3-4.8%.
High inflation, which cannot be brought down, is one of the signs of an overheating economy in Russia.
