1.5% foreseen Russia’s GDP for 2025, a percentage point lower than the previous official forecast, Finance Minister Anton Siluanov said in a meeting with Putin in Kremlin on Wednesday.

Russia’s economy has grown strong in 2023 and 2024, despite the multiple circular penalties imposed by the West after its invasion of Ukraine in 2022, but this year it is a sharp deceleration, Reuters notes.

Domestic activity has been burdened by the lack of workforce and the high interest rates imported to tackle inflation, which accelerated due to records of military spending.

Siluanov told President Vladimir Putin that the Treasury now provides for at least 1.5% growth this year. The official prediction for 2025 was 2.5%.

“If this year we see rather difficult conditions for the implementation of monetary and credit policy, we see that the rate of economic growth will be at least 1.5% this year,” Siluanov said.

“An balanced budget will give the Central Bank more opportunities to relax monetary and credit policy, which means that credit resources will be more accessible. Consequently, next year this will give an additional impetus to socio -economic development, “he added.

Russia’s economy developed by 4.3% in 2024, although the central bank forecasts an increase of 1-2% this year.

“There are many shades in ensuring economic growth,” Putin told Siluanov. “But in general, of course, I support this approach,” he said.