Kremlin dismisses economic strain as central bank signals downturn

The central bank’s latest survey shows sentiment dropping to minus 3.6 in July, the lowest level since mid-2022. This shift marks a sudden reversal in corporate confidence, accompanied by a notable rise in price expectations following five months of decline. Yevgeny Kogan, a professor at the Higher School of Economics, observed that such a rapid deterioration has historically signaled the onset of economic crises.

Kogan warned that the combination of rising costs and fuel shortages—exacerbated by strikes on oil refineries—threatens to push the country toward stagflation. He argued that policymakers now face a precarious trade-off: raising interest rates to curb inflation risks stifling business activity, while lowering them to support the economy could cause price growth to spiral out of control. For now, the Kremlin insists these challenges are understood and being addressed through routine presidential oversight.