"But central bank governor Elvira Nabiullina denied Russia is in a recession, pointing to other data points displaying more strength, like employment, real income, consumer demand and industrial production. "We do indeed have a cooling of the economy. This is natural when coming out of overheating, when production capacity must catch up with demand," she said at a news conference, according to Reuters."
"The Bank of Russia lowered benchmark rates again on Friday and denied the economy is in a recession, even after its own data showed GDP has been shrinking this year. The latest cut brought rates down by 1 percentage point to 17% and marked the third reduction since June as sky-high borrowing costs have helped cool inflation but are also straining the wartime economy."
"While Russia had been remain resilient amid Western sanctions imposed after President Vladimir Putin launched his invasion of Ukraine in 2022, data from the central bank last week revealed more damage than previously thought. A chart in a report showed GDP shrank on a sequential basis in the first and second quarters, meeting the definition of a so-called technical recession."
The central bank lowered its benchmark interest rate by one percentage point to 17%, the third cut since June. The bank cites cooling inflation after very high borrowing costs, but its own data showed sequential GDP contraction in both the first and second quarters. The governor highlighted employment, real incomes, consumer demand and industrial production as stronger indicators. Large wartime spending and incentives for recruits have pushed factories to produce weapons and created labor shortages that stoke inflation. Elevated rates last year and ongoing strain on borrowers have raised warnings about a potential debt stress in the banking sector.
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