Central Bank warns of record unemployment as Russia's economy approaches collapse

The Moscow Times reported the information.

Nabiullina emphasized that Russia is facing such a situation for the first time.

"We have never had such low unemployment. And there are few countries where it has ever dropped so much," said the head of the Russian Central Bank.

According to Central Bank surveys, 73% of businesses are experiencing a labor shortage, and the capacity utilization rate at factories, as reported by Rosstat, Russia's National Statistical Office, has exceeded 80%, also a historic record.

"When the economy reaches the limits of its production capabilities but demand continues to be stimulated, stagflation occurs,” Nabiullina noted.

To avoid this risk, the Central Bank is raising the key rate, she explained: “In other countries that have gone through stagflation, this is the result of an unreasonably soft monetary policy when it needs to be tightened” (quotes from Reuters and TASS).

According to Rosstat, the Russian economy continues to grow, although the pace is slowing as loans become more expensive, raw materials industries lose Western markets, and defense industry plants reach capacity limits. In the third quarter, according to official estimates, Russia's GDP increased by 3.1% after growing by 4.1% in the second quarter and by 5.4% in the first.

Next year, according to the Central Bank's forecast, the economy may find itself on the verge of stagnation: GDP will increase by only 0.5-1%, while investment and private consumption growth rates may zero out. The International Monetary Fund predicts a threefold slowdown in the Russian economy - from 3.9% growth this year to 1.3% next year.

According to IMF estimates, next year Russia will grow one-third slower than developed countries (1.8%) and three times slower than developing countries (4.2%). The Russian economy will lag behind China, where the fund predicts growth of 4.5%, by 3.5 times, and behind India (6.5%) - by five times. At the same time, by 2029, Russia's growth rate will slow even more - to 1.2% per year, the fund expects.

• The Russian State Duma approved a bill in its second and third readings allowing the cancellation of overdue loans up to 10 million rubles for participants in the war against Ukraine.