Analyst: Russia must end Ukraine war to avoid economic recession

Russia must end the war in Ukraine as soon as possible if it is to return to sustainable economic growth; if not, the state budget will inevitably face recession, economist Alexander Razuvaev has warned.

He said that if Russia does not end hostilities in the neighbouring country in the near future, the fiscal deficit will continue to grow rapidly, Caliber.Az reports, citing Russian media.

Razuvaev also called for a fairer distribution of spending, with greater emphasis on the social sector.

The expert described the current federal budget deficit as “huge,” adding that weak investment inflows remain another major problem for the Russian economy.

According to him, both foreign and domestic investors are being deterred by military and sanctions-related risks.

The analyst also pointed to tight monetary policy by the Russian Central Bank as an additional obstacle, arguing that the key interest rate should be reduced to 8–10% to stimulate consumer spending and support domestic demand.

However, he stressed that such measures would not be effective unless the war ended in the foreseeable future.

“The first thing is to end the special military operation,” he concluded.

Earlier, analysts at the Centre for Macroeconomic Analysis and Short-Term Forecasting (CMASF) also warned that Russia is approaching a recession.

They said the previous growth model—based on rising wages, consumption, housing construction, and import substitution—has been exhausted, with no new growth drivers emerging.

The think tank reported that even a key rate cut would not be sufficient to improve the situation in the medium term.

By Bakhtiyar Abbasov