Economic issues discussed as Putin gathers in the Kremlin, projected drop in inflation to 6-7%
In a significant economic meeting held in the Kremlin on August 12, 2025, President Putin and key government officials discussed the country's budget preparation, inflation, labor market, economic risks, and financial performance.
Budget Preparation
The Russian government has embarked on drafting the federal budget for 2026–2028, focusing on strategic national priorities such as improving citizens’ quality of life, social sphere development, infrastructure, and strengthening defense capabilities. The budget drafting process is complex, involving economic, financial, and political coordination with parliament and key parties. The government bases this on socioeconomic forecasts and global market conditions.
Inflation and Balanced Growth
Putin emphasised the importance of maintaining balanced growth, which primarily means curbing inflation while maintaining low unemployment steadily. The government and the Bank of Russia have worked together to guide the economy back to this trajectory in 2025.
Labor Market
Maintaining low unemployment was identified as a key measure of balanced growth. The economic policy aims to sustain a steady low unemployment rate, indicating continued focus on labor market stability.
Economic Risks
Putin acknowledged the influence of both domestic factors and global market conditions on the economy. Although specific risks were not extensively outlined in the transcript, the political-economic complexity of budgeting and ongoing global economic challenges imply cautious risk management. External analysis suggests that the Russian economy is facing serious strains from Western sanctions, falling oil revenues, and a high federal budget deficit—the highest in 30 years—which represent significant economic risks to Russia’s stability and war effort sustainment.
Financial Performance
Attention was given to the execution of the federal budget in the current year. The government is monitoring fiscal performance and coordinating economic strategy across government bodies, including the Ministry of Finance and the Central Bank. Measures such as forcing lenders to issue preferential loans to support defense contracts have been employed to maintain financial stability despite external pressures.
Current State of the Economy
The non-oil and gas revenues of the budget for January - July increased by 14%, amounting to 14.8 trillion rubles. Including VAT growth, the tax growth was 6.9%. The growth of "turnover" taxes for the same period was 6.7% compared to the same period last year. Despite the increase, unemployment remains at a record low in the country, at 2.2%. The share of enterprises with a shortage of labor is decreasing.
This meeting underscores a comprehensive approach to balancing fiscal discipline, social development, and defense needs amidst challenging economic conditions shaped by global market volatility and sanctions. The government's focus on strategic tasks, inflation control, labor market stability, and cautious risk management is evident in the discussions and strategies presented.
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