Russia braces for economic crisis as it revives Covid-era committee
Russia has reactivated a special economic commission initially created during the Covid-19 pandemic to monitor struggling industries and implement relief measures, The Moscow Times reported on Feb. 11, citing Russian Deputy Prime Minister Alexander Novak.
The news comes as the Kremlin reportedly grows increasingly concerned by the state of Russia's economy amid Western sanctions and soaring inflation caused by record wartime spending.
Novak said that the commission resumed work in December 2024, focusing on nine key sectors and over 2,000 enterprises.
Among the primary risks is a "decline in investment activity," according to Novak. Several industries, including coal, metallurgy, and timber, are experiencing sharp downturns due to sanctions and falling exports.
Coal companies, facing an 80 billion ruble ($845 million) loss from plummeting exports, have begun closing mines, prompting fears of mass bankruptcies.
Dmytro BasmatThe government is already formulating support measures. Russia's metallurgical plants, struggling with reduced access to foreign markets, are also expected to receive state assistance, followed by the timber industry, whose exports have dropped by a third.
The agricultural sector is also distressed, suffering from drought and poor harvests. Russia's wheat production declined by 16% in 2024, while corn, barley, and sugar beet yields dropped by nearly 20%.
On Feb. 7, Russian President Vladimir Putin acknowledged that inflation remains a significant challenge, directing the government to implement measures to stabilize prices in 2025. According to The Moscow Times, consumer prices rose 9.5% in 2024 and have since climbed to 9.9% year over year.
The Russian Central Bank, which has maintained an interest rate of 21%, sees "no signs of a sustainable slowdown in price growth" due to sanctions, currency depreciation, and high defense spending.
The Central Bank forecasts inflation to drop to 5.2% and 8.6% by the end of 2025. Its next policy meeting on Feb. 14 will determine further economic stabilization measures.
Dmytro Basmat
