Boris Titov has called for urgent easing in monetary policy as investment climate worsens
The Russian economy is showing signs of strain and monetary policy must be eased quickly to avoid further decline, a top Kremlin adviser has warned.
The Bank of Russia cut its key interest rate by 100 basis points in June, to 20%, citing easing inflation. This marked the first rate reduction since 2022, when the central bank adopted a tight monetary policy to stabilize the economy amid Western sanctions.
Boris Titov, Presidential Commissioner for Entrepreneurs’ Rights of Russia, sounded the alarm while commenting on a new survey by the Russian Academy of Sciences’ economic forecasting institute, which assessed industrial and infrastructure enterprises this spring.
”The results, though expected, are not too encouraging,” Titov wrote on Telegram on Monday, pointing to falling investment activity.
According to the report, fewer than half of companies are currently investing, down from 64% a year ago. Just 35% are preparing to launch new production – a drop from 50%. Access to credit has also worsened – only 32.5% of firms consider investment loans affordable, down from nearly 40%, while the share of those investing without borrowing has nearly doubled – from 24% to 43.7%. A growing number also voiced concern over weakening domestic demand.
”If conditions don’t change, the problems will grow,” Titov stated, adding that “monetary policy needs urgent easing.”
He said, the economy, outside the defense sector, needs affordable credit, and that current growth is being driven by momentum from earlier gains.
Russia’s economy has operated under unprecedented Western sanctions aimed at isolating the country since the Ukraine conflict escalated in 2022. It has nevertheless outperformed forecasts, with GDP growing by 4.1% in 2023 and 4.3% in 2024. Russia is now the world’s fourth-largest economy by purchasing power parity (PPP), which adjusts for cost-of-living differences across countries.
Last month, Economic Development Minister Maksim Reshetnikov warned that the economy may be starting to cool, noting that this trend depends heavily on policy, particularly interest rates.
The Bank of Russia expects growth to slow to 1-2% in 2025, while the government forecasts a more optimistic 2.5%.
