Elvira Nabiullina, Governor of the Central Bank of Russia, has stated that the resources which enabled Russia’s economy to grow over the past two years despite its full-scale war against Ukraine and international sanctions have now been depleted.

Source:Nabiullina at the St Petersburg International Economic Forum, as reported by The Moscow Times

Details:"We experienced fairly high growth for two years because unused resources were engaged," Nabiullina said, referring to labour, production capacity, banking system capital reserves and the National Wealth Fund (NWF), which the Russian government has been using to patch budget holes and finance trillion-ruble megaprojects.

"Now we must understand that many of these resources are truly exhausted," she added.

Unemployment in Russia has dropped to a historic low of 2.3%, while mass emigration and the mobilisation of men for the war have created a labour shortage estimated at two million people.

Capacity utilisation at Russian enterprises has exceeded 80%, the highest level in modern Russian history.

Liquid assets in the NWF have shrunk threefold since the start of the war, falling to RUB 2.8 trillion (approx. US$35 billion). 

The fund’s currency reserves have declined to CNY 153.7 billion (approx. US$21 billion), the lowest since the fund’s creation in 2008, and its gold reserves have dropped to 139.5 tonnes from over 400 tonnes before the full-scale invasion.

Corporate profits in Russia fell by one-third in March and by half in the oil and gas sector. Industrial growth slowed to a near standstill with only 1.2% growth from January to April, and civilian sectors have started to decline.

Background: 

• Nabiullina has faced pressure from the Russian government over the country’s record-high key interest rate, which has negatively impacted the economy. 
• In June, the Central Bank lowered the rate from 21% to 20% annually, though it remains high.

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