Russia economy meltdown as country ‘runs out of potatoes’ while prices rise 92%

Russian president Vladimir Putin has acknowledged crop shortages as pressure on the country’s economy continues to mount. Pressure is mounting on Russia amid labour shortages, international sanctions, record interest rates, and inflation, but Putin’s admission of shortages of key crops marks a milestone in the nation’s woes.

Speaking yesterday in a televised meeting, he said: “Yesterday, I met with representatives from various business sectors, including agriculture. It turns out that we don’t have enough potatoes. “I spoke with Alexander Grigoryevich Lukashenko. He said, ‘We’ve already sold everything to Russia’.” Potato shortages have become a serious problem in neighbouring Belarus, with supplies limited in stores.

Across Russia, prices for the produce have soared, with state statistics agency Rosstat claiming that prices rose by 92% last year.

Since the beginning of the war, potato prices have risen at a higher rate than any other food item, with year over year prices climbing to 167% by May 2025.

The surge in prices follows a year where harvests across the country have been poor due to unseasonal frosts and drought.

Last year, the country produced 7.3 million metric tons of potatoes, 1.2 million less than it made in the year before.

The crisis has led to calls for the state to begin regulating the retail price of potatoes.

Deputy State Duma Speaker Boris Chernyshov said: “Potatoes are sometimes called the second bread.

ARTICLE

Russia’s struggling war economy might be what finally drives Moscow to the negotiating table
By Holly Ellyatt, CNBC
Updated on May 22, 2025 at 1:36 am
https://www.nbcchicago.com/news/business/money-report/russias-struggling-war-economy-might-be-what-finally-drives-moscow-to-the-negotiating-table/3751514/

“The growth that remains in the Russian economy is concentrated in manufacturing, specifically the defense sector and related industries, and is being fueled by state spending, according to Alexander Kolyandr, senior fellow at the Center for European Policy Analysis.

“After three years of militarizing the country, Russia’s economy is cooling,” he said in online analysis for CEPA, noting that the slowdown in inflation, less borrowing by companies and consumers, declining imports, industrial output and consumer spending all pointed to the slowdown continuing.

That’s not disputed by Russian officials, with the Economic Development Ministry predicting that economic growth will slow from 4.3% in 2024 to 2.5% this year.

“The economy is not demobilizing; it is just running out of steam. That said, a drop can easily become a dive. Bad decisions by policymakers, a further dip in oil prices, or carelessness with inflation, and Russia could find itself in trouble,” Kolyandr said.”

ARTICLE

Russia’s Economic Engine Stalls: GDP Growth Slumps Amid War Costs, Sanctions, and Oil Price Decline
By Gloria Ogbonna
May 20, 2025
https://yournews.com/2025/05/20/3454254/russias-economic-engine-stalls-gdp-growth-slumps-amid-war-costs/

Russia’s Economic Engine Stalls: GDP Growth Slumps Amid War Costs, Sanctions, and Oil Price Decline
yournews.com
May 20, 2025
By Gloria Ogbonna
https://yournews.com/2025/05/20/3454254/russias-economic-engine-stalls-gdp-growth-slumps-amid-war-costs/

Russia’s economy is showing clear signs of strain as its growth momentum falters dramatically in early 2025.

According to data released Friday by Rosstat, Russia’s state statistical agency, the country’s gross domestic product (GDP) grew by just 1.4 percent in the first quarter of 2025 — a sharp drop from the 4.5 percent expansion seen in the final quarter of 2024.

This underwhelming figure fell short of both government and analyst expectations, which had already been lowered to around 1.7 percent in light of growing economic pressures.

Outside economists warn that this downward trend may not be a one-off. Instead, they suggest it could mark the beginning of a more prolonged economic downturn, potentially tipping the nation into a recession.

The slow pace of growth is expected to persist through the coming months. Even if Russia meets its official forecast of 2.5 percent growth by year-end, it would still lag behind the average of 4 percent GDP growth recorded over the past few years.

Analysts cited in The Moscow Times attributed the disappointing first-quarter performance to a combination of factors: tight monetary policies enacted by the Russian central bank to curb inflation, continuing supply chain disruptions, falling global oil prices, and the delayed but growing impact of international sanctions in response to Russia’s ongoing war in Ukraine.

These sanctions, first imposed in 2022, have gradually restricted Russia’s access to foreign capital, advanced technology, and global markets.

Ironically, the possibility of a peace deal with Ukraine—something that might be seen as economically stabilizing in most countries—could introduce a new shock to Russia’s economy.

As The Moscow Times noted, nearly 40 percent of Russia’s GDP growth in 2024 was driven by the defense and military-industrial sectors. If hostilities wind down, government spending in those areas could be slashed, pulling a critical support out from under the economy.

Further emphasizing the fragility of the situation, the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF), a Russian government-affiliated think tank, reported that the civilian sector of the economy is already in recession.

It estimates that the civilian economy has been shrinking at a rate of 0.8 to 1.1 percent per month throughout 2025, largely due to the government’s continued redirection of financial and human resources toward military production and war efforts.

The Kyiv Independent, reporting from Ukraine, took the sudden GDP drop as fresh evidence that Russia’s economy is “under increasing strain” from its prolonged military conflict and the tightening grip of Western sanctions.

But one of the most critical and potentially destabilizing forces in Russia’s economic outlook is the declining price of oil — the lifeblood of its federal budget.

Crude prices are now trending between $55 and $65 per barrel. Due to sanctions, Russia is forced to sell its oil at a significant discount — typically $8 to $12 below global market rates. This pricing gap is significantly slashing government revenues.

Current forecasts indicate that Russia will earn approximately $32 billion less in oil revenue in 2025 than was projected at the end of 2024.

This budgetary shortfall will make it harder for the Kremlin to maintain both its military spending and any semblance of domestic economic support.

Worsening the situation for Russia is the recent decision by OPEC+, the alliance of oil-producing nations that includes Russia, to lift production caps. This move has flooded the global oil market with additional supply, driving prices down further and shrinking Russia’s revenue base.

There is also a political backdrop to this economic drama. Despite frequent accusations during the 2020 U.S. presidential campaign that Donald Trump was soft on Russia, it was the Biden administration that implemented broad exemptions to sanctions, allowing European nations to continue purchasing Russian oil and gas using U.S. dollars.

These carve-outs enabled Moscow to keep selling its energy products on the global market during wartime.

However, those exemptions expired in March 2025 under the Trump Treasury Department, which has since taken a more hardline approach.

Trump has repeatedly criticized European nations for indirectly supporting Russia’s war efforts by continuing to buy discounted Russian oil.

His administration’s recent move to let sanctions fully take effect is contributing to the mounting financial pressure on the Kremlin.

As Russia struggles to balance war expenditures, declining energy revenues, and the threat of a civilian recession, its once-resilient economy appears increasingly vulnerable.

Unless energy markets rebound or sanctions are lifted, Moscow may face even deeper fiscal and political turmoil in the months to come.

SOURCE Breitbart

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