Vladimir Putin ended 2024 like he started it: On a triumphalist note. "We are confident that everything will be fine, we will only move forward," declared the head of the Kremlin in his New Year's address, which coincided with the 25th anniversary of his accession to power. Hailing the country as "independent, free and strong," he appeared all the more self-confident given that his army has conquered almost 4,000 square kilometers of Ukrainian territory in the last 12 months. Yet a shadow looms like a latent threat: the sudden deterioration of the country's economic situation.
During his New Year's address, the president did not mention the risk of stagflation. However, at his December 19 press conference, he acknowledged that inflation at over 9% is an "alarming signal" and conceded that "sanctions (...) have an impact to a certain extent." The rise in prices, twice as high as the Kremlin's target, forced the central bank to raise its key interest rate to 21%, the highest level in over 20 years. Consequently, bank rates are approaching 30%. As for the ruble, it has been plunging as never before since March 2022, when the first Western sanctions were imposed against Moscow. These indicators reveal a war economy gripped by inflation, threatened by overheating, and overtaken by uncertainty.
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