Russia's inflation has decreased from 8.2% to 4.8%, leading the central bank to lower its key interest rate from 20% to 18%. The economy is projected to grow by 1% to 2% this year, despite the manufacturing sector experiencing its worst contraction in three years. High interest rates have curbed consumer demand and business investment. Western sanctions following the invasion of Ukraine have heavily impacted growth, while defense spending and oil exports have supported the economy thus far.
Russia may be getting its spiraling inflation under control, but it comes at a growing economic cost, according to a think tank.
Current inflationary pressures, including underlying ones, are declining faster than previously forecast.
The Bank of Russia expects Russia's economy to grow 1% to 2% this year. Meanwhile, the International Monetary Fund expects growth of 0.9%.
Since its full-scale invasion of Ukraine triggered sweeping Western sanctions, Russia has kept its economy afloat through massive defense spending and revenue from oil and gas exports.
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