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- Rather alive: analysts have denied the presence of the "Dutch disease" in the Russian economy
Rather alive: analysts have denied the presence of the "Dutch disease" in the Russian economy
A strong national currency simultaneously works in two directions: it restrains inflation, but increases pressure on exporters, industry and the budget, reducing the ruble revenue of commodity companies. Against this background, the Russian Federation is talking about the "Dutch disease" of the economy — a situation where high commodity incomes and a strong currency gradually worsen the position of other industries. However, experts interviewed by Izvestia are confident that there is no classic scenario of such a "disease" in Russia: the industry is not collapsing, adaptation and partial import substitution are underway. Why inflation is hovering near zero, but the Central Bank is so careful to lower the rate — in the Izvestia article.
What is the "Dutch disease" of economics?
An excessively strong ruble is now creating distortions in the economy, experts interviewed by Izvestia believe. It reduces the earnings of exporters and worsens the conditions for a part of the industry. According to the Central Bank on May 28, since the beginning of the year, the dollar exchange rate has decreased by almost 10% to 70.9 rubles/$.
On May 28, the first deputy chairman and co-owner of Sovcombank, Sergei Khotimsky, said that the strong strengthening of the ruble in 2026 and the inability of analysts to correctly predict the exchange rate were due to the "lack of will of the state" in the fight against the "Dutch disease." He added: all Russian exports have not stopped yet, because "inertia is very big." However, when such companies run into problems and are forced to cut supplies, "it will be extremely difficult to restore economic potential." Sergei Khotimsky also pointed out the "sad situation in a large number of sectors."
The "Dutch disease" is a situation where commodity revenues strengthen the national currency, and other industries lose their competitiveness because of this, explained Vladimir Chernov, analyst at Freedom Finance Global. There are such signs in the Russian Federation — a strong ruble helps importers and restrains inflation, but it hits exporters, industry, the budget and companies whose revenue is in foreign currency and expenses in rubles.
At the same time, there is no classic scenario of the "Dutch disease": the industry has not been destroyed, adaptation and import substitution are underway, said Yaroslav Kabakov, Director of Strategy at Finam IC. In this case, it is more correct to talk about a raw material model with strong government regulation and a conflict of macro goals. This means that it is necessary to simultaneously keep inflation down, support growth and finance the budget.
At the same time, the wording about the "lack of will" of the authorities is too harsh, experts say. The state cannot administratively weaken the ruble without side effects, otherwise it will hit inflation through the cost of imported goods and equipment and the expectations of the population, explained Vladimir Chernov.
The structural transformation of the economy is not a one—year task: it requires political will, stable institutions, long-term investments and its own technological base, explained Ahmed Yusupov, partner of the Goldman and Po communications agency. However, under conditions of sanctions and rising treasury costs, the possibilities for such changes are limited. Rather, it is not about government inaction, but about a conflict of priorities — between maintaining fiscal sustainability today and a deep restructuring of the economy in the future, the expert explained.
At the same time, there are objective reasons why it is difficult to deal with the "Dutch disease" or its symptoms. For example, the raw materials sector provides the budget with basic income and there is nothing to replace them quickly, explained economist Olga Gogaladze. Oil and gas revenues to the treasury in January–April 2026 amounted to 2.3 trillion. At the same time, sanctions restrict access to technology and external investment, and economic restructuring takes years, she explained.
What are the consequences of the "Dutch disease"?
The exchange rate of the national currency affects inflation through the cost of imports. With the strengthening of the ruble, foreign goods, equipment and components become cheaper, which reduces pressure on prices within the country. The weakening of the currency, on the contrary, makes the import of products more expensive and accelerates the growth of their value.
After the VAT increase from 2026, inflation accelerated, reaching more than 6.3% in early February. However, the situation improved significantly in the spring — by May, price growth in the country had become near zero, and then deflation was recorded altogether. This is primarily due to the significant strengthening of the ruble.
So, from April 28 to May 4, Rosstat recorded a decrease in prices by 0.02%, a similar trend was repeated on May 13-18. However, by May 19-25, inflation had returned to a slight plus (0.07%). Over the past week, food prices have been falling, while non-food products and services have continued to rise in price. At the same time, annual inflation reached 5.3% at the end of May, which is still higher than the Bank of Russia's target of 4%.
Currently, the economy is gradually adapting to tougher monetary conditions and a slowdown in lending, said Mikhail Nikitin, Head of International Business and Finance Practice, partner at 5D Consulting. People and businesses have become more careful about spending, and because of this, companies can no longer raise prices as easily as in 2023-2024, Vladimir Chernov added.
For Russia, deflation is usually seasonal. In spring and summer, prices may decrease due to cheaper vegetables, fruits and a strong ruble, so the weekly statistics will still fluctuate, the expert explained. Deflation may occur again in the summer if the ruble remains strong, demand remains subdued, and seasonal food prices continue.
Why the Central Bank is cautiously approaching the key rate cut
The slowdown in inflation gives the Bank of Russia room for further rate cuts. But a quick and drastic easing of monetary policy should not be expected, said Vladimir Chernov. It is not just one week that is important for the regulator, but the stability of the process.
If weekly inflation continues to stay near zero, and annual inflation continues to decline to 5%, the Central Bank may begin to act more actively, he explained. According to experts interviewed by Izvestia, it is likely that at the next meeting on June 19, the key will be lowered by 0.5 percentage points to 14%. Although at the last press conference, the chairman of the Bank of Russia, Elvira Nabiullina, allowed a pause.
In addition to the high risks of accelerating global price growth, the decision of the regulator will be influenced by the inflation expectations of the population. In May, they increased by 0.1% compared to April and amounted to 13%, and this is too high a level for a soft monetary policy of the Central Bank, explained Vladimir Chernov.
The population and businesses are used to expecting price increases in advance, and this in itself pushes up inflation, said economist Olga Gogaladze. If the regulator lowers the rate too early, demand may rise quickly, the ruble may weaken, and price growth may accelerate again. For the Central Bank, it is now more important to maintain confidence in its policy than to quickly switch to cheap money, the expert said.
The central bank is acting cautiously, as easing policy too quickly is riskier than delaying a rate cut, Vladimir Chernov added. Although inflation is slowing down, public expectations remain high, wages in a number of industries are growing faster than productivity, and budget expenditures continue to support demand. External factors such as the situation in the Middle East and fluctuations in energy prices remain an additional risk to the economy.
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