Causes and consequences: Putin discussed with the Cabinet of Ministers and the Central Bank the negative dynamics in the economy

The dynamics of Russia's macroeconomic indicators turned out to be lower than the forecasts of the government and the Central Bank: in January — February, Russia's GDP decreased by 1.8%. Vladimir Putin said this on April 15 at a meeting on economic issues. Manufacturing industries, industry as a whole, as well as construction went into negative territory. In these circumstances, the President instructed to prepare measures to restore the growth of the industry, support business and improve the employment structure. Experts predict a change in dynamics in the third quarter. What determines the speed of recovery and how the labor market in the country is changing is in the Izvestia article.

What is the reason for the decline in key indicators?

On April 15, Vladimir Putin convened a meeting on economic issues. For this purpose, the entire sectoral block of the Cabinet of Ministers, representatives of the Central Bank and the banking industry personally arrived in the Kremlin. A similar meeting took place relatively recently — about three weeks ago. Both then and now, the president announced a decrease in the country's macro indicators. But if last time the head of state mainly attributed this to seasonal and calendar factors (there were fewer working days in January and February), now the rhetoric has changed.

— These are, of course, objective circumstances, but it is obvious that they are not the only ones that determine business and investment activity in the country. I expect to hear detailed reports today on the current economic situation and why the trajectory of macro indicators is still below expectations. Moreover, it is lower than the expectations of not only experts and analysts, but also the forecasts of the government itself, as well as the Central Bank of Russia," Vladimir Putin said.

The results are as follows: Russia's GDP decreased by 1.8% in January —February. Manufacturing industries, industry in general, and construction, a key area of the economy, have gone into negative territory. The industry is currently undergoing a cooling phase after overheating, and weak dynamics is a normal stage, experts explain.

According to Ilya Fedorov, chief economist at BCS World of Investments, the effect of preferential mortgages is disappearing, wage growth is slowing down, and businesses, especially small and medium-sized ones, have taken a break after tax adjustments. Investments have also stopped increasing, high interest rates and a shortage of "long" money in the system are affecting. The strong ruble and its volatility create additional pressure.

The President instructed the Cabinet of Ministers to submit proposals on additional measures to promote the resumption of economic growth. In today's conditions, there are several support tools, says Andrey Glushkin, Managing Partner of Main Division. The first is a reduction in the key rate: the Central Bank has already lowered it from 21% to 15%, which is gradually reducing the cost of loans for construction and industry. The second mechanism is the advance payment of government contracts: according to the expert, this is what revived the construction sector a little in March. The third is targeted support for industries with a high multiplier (that is, with a strong effect on the budget and economy), such as infrastructure, housing and logistics.

The President also stressed that the Russian authorities must maintain a course towards budget stability and balance in the face of sharp fluctuations in foreign markets. Most likely, we are talking about the situation with oil prices due to the escalation of the conflict in the Middle East. Earlier, Vladimir Putin had already warned businesses and authorities: do not succumb to the temptation to take advantage of the situation, you cannot "eat away" the proceeds from price increases — markets may swing in the other direction. The Cabinet of Ministers, according to Vladimir Putin, has already prepared measures to support budget stability.

By the way, the Ministry of Finance has already responded to this — the ministry said it could revise the budget rule from 2027. This is a mechanism that limits the use of oil and gas revenues. The base price of oil is included in the budget (the "cut—off price") — revenues from the sale of raw materials within its limits go to current expenses, and excess profits are sent to reserves, primarily to the National Welfare Fund. Finance Minister Anton Siluanov also allowed for a tightening of the mechanism by reducing the cut-off price. The decision will be made before the budget for the new three-year period is formed.

At the same time, the operational data on the economy is still contradictory, says Olga Belenkaya, head of the Macroeconomic analysis department at Finam. On the one hand, the rise in commodity prices in March amid the Middle East conflict and the temporary easing of sanctions supported the economy. On the other hand, business surveys (monitoring by the Bank of Russia, PMI, RSPP data) show a deterioration in business environment assessments.

When will the Russian economy start to grow

The economic turnaround may begin as early as the third quarter, Ilya Fedorov from BCS World of Investments believes. According to him, budget expenditures, which were high in March, have not yet fully reached the economy — they should support demand in the future. In addition, the recovery is driven by accumulated savings: interest in real estate and cars is already growing amid expectations of lower interest rates, the economist noted. Andrey Glushkin agrees that the speed of economic recovery will depend on the further decline in inflation and the behavior of the population.

At the same time, the situation looks ambiguous for citizens: pensions increased nominally by 8.8%, but in real terms — by only 2.7%, real wages increased by 8.6% in January, but utility bills rose by about 15% over the year, the expert noted. And all this in conditions of historically minimal unemployment in the country. At the meeting, Vladimir Putin clarified that it currently stands at 2.1% in Russia.

According to the head of state, this dynamic indicates a change in the labor market and the development of flexible, platform-based types of employment. This form of work in the Russian Federation is gaining more and more popularity. According to HSE estimates, between 2 million and 5 million people regularly or occasionally work using digital platforms in Russia.

Natalia Poluyanova, a member of the State Duma Committee on small and medium-sized enterprises, explained to Izvestia that this helps both citizens (since there are few traditional employers in small towns and regions) and businesses that do not need to maintain a huge staff.

— It attracts the right people for a specific task — it reduces costs and increases efficiency, which also cannot but affect the economic performance of the country, — said the deputy.

By the end of the year, GDP may add about 1% due to the easing of monetary policy and increased budget spending, predicts Ilya Fedorov. In general, the authorities also envisage a moderate scenario: the Bank of Russia expects economic growth in 2026 at the level of 0.5–1.5%, the Ministry of Energy — about 1.3%.