Ukraine has launched another long-range drone strike deep inside Russian territory, hitting a major Wildberries warehouse more than 2,000 kilometers from the Ukrainian border. The attack is part of Kyiv's growing campaign targeting Russia's logistics infrastructure. According to reports, nearly 20 Wildberries facilities have been struck since mid-July.

Ukraine says the strikes are aimed at increasing the cost of Russia's war effort, while Moscow accuses Kyiv of targeting civilian infrastructure. At the same time, Russia has intensified attacks on Ukrainian warehouses, Black Sea ports, and critical export infrastructure, raising concerns over global food supplies and escalating tensions in the Russia-Ukraine war.

Ukraine Drones Strike Deep Inside Russia | Major Wildberries Warehouse Hit 2,000 KM From Border

Russia&rsquo;s economy is showing signs of weakening, as official statistics reveal a sharp decline in growth in the first quarter of 2025. According to preliminary data released by the Federal State Statistics Service (Rosstat) on May 16, the country&rsquo;s gross domestic product (GDP) rose by just 1.4 per cent year-on-year. This marks a steep fall from the 4.5 per cent growth reported in the previous quarter and 5.4 per cent in the same period last year.
The slowdown came in below forecasts from both the Russian Economic Development Ministry, which predicted 1.7 per cent, and analysts at Bloomberg, who expected 1.8 per cent. Notably, Rosstat's quarter-on-quarter data showed the economy contracted by 0.4 per cent&mdash;its first quarterly decline since 2022&mdash;signalling growing economic vulnerability.
Experts have attributed the downturn to a combination of factors, including the central bank&rsquo;s high interest rate policy, persistent inflation, supply chain disruptions, and falling revenues from energy exports. From January to April, oil and gas revenues dropped by 10 per cent&mdash;a significant blow to a country that relies heavily on its energy sector.
<h2 dir="ltr">Economy in trouble?</h2>
Despite the troubling first quarter, Rosstat recently revised its GDP growth estimate for 2024 upward to 4.3 per cent, citing stronger-than-expected performance in the fourth quarter. However, doubts are growing about the reliability of Russia&rsquo;s economic statistics.
A report by the Stockholm Institute of Transition Economics (SITE) warned that the Russian economy&rsquo;s resilience is only superficial. It noted deepening structural weaknesses, unsustainable fiscal practices, and an overreliance on military-driven stimulus.
Reuters reported that Torbjorn Becker of SITE pointed to discrepancies in Russia&rsquo;s inflation and monetary policy data as evidence that real GDP growth may be overstated. &ldquo;Russia claims inflation is 9&ndash;10 per cent. Why then is the central bank&rsquo;s key rate set at 21 per cent?&rdquo; he asked, arguing that understated inflation leads to inflated real GDP figures.
The SITE report, presented to European Union finance ministers, further claimed that Russia&rsquo;s budget deficit is likely larger than officially reported due to off-the-books war financing via the banking system. Official figures cite deficits of 2.3 per cent of GDP in 2022, 1.9 per cent in 2023, and 1.7 per cent in 2024&mdash;yet SITE estimates suggest the real fiscal shortfall could be twice as large, raising concerns about looming banking sector risks.
<h2 dir="ltr">War and sanctions compounding economic pressure</h2>
The long-term impact of sanctions continues to weigh heavily on the Russian economy. The Russian Finance Ministry reportedly acknowledged &ldquo;hundreds of billions of dollars&rdquo; in direct losses to the financial sector, while energy export earnings fell by an estimated $78.5 billion between December 2022 and June 2024, according to the Kyiv School of Economics.
Russia&rsquo;s pivot to a war economy has led to a surge in military spending, but this has come at the cost of consumer sector stability. Civilian businesses are struggling under the burden of soaring interest rates and inflation.
In 2024, inflation reached 9.5 per cent, and bankruptcies rose 26 per cent year-on-year in the first three quarters, totalling 6,392 corporate insolvencies, according to Interfax.
Even as Moscow touts growth figures, Western analysts and institutions like the IMF are sceptical. The IMF estimates that while Russia&rsquo;s economy grew by 3.8 per cent in 2024, growth will slow to 1.4 per cent in 2025 and just 1.2 per cent in 2026.
<h2 dir="ltr">Peace talks, but no ceasefire yet</h2>
Adding to the uncertainty are recent developments in the ongoing war in Ukraine. On May 16, Russia and Ukraine held their first direct peace talks since early 2022, agreeing to a large prisoner swap involving 1,000 prisoners each. However, significant gaps remain, especially over the issue of a ceasefire.
Ukrainian officials, backed by Western allies, have insisted on a temporary ceasefire as a first step toward broader peace. Russia has so far resisted this proposal. The two sides exchanged ceasefire proposals and discussed a potential meeting between their presidents, though no agreements were finalised.
Analysts warn that any reduction in military spending following a peace deal could deliver a short-term shock to Russia&rsquo;s already strained economy. Conversely, failure to reach an agreement could trigger a new round of sanctions from the West, compounding existing pressures.
&nbsp;

Business & Economy: According to data released by Rosstat, Russia’s GDP rose by just 1.4 per cent year-on-year, a steep fall from the 4.5 per cent in the last quarter

Russia’s economy is showing signs of weakening, as official statistics reveal a sharp decline in growth in the first quarter of 2025. According to preliminary data released by the Federal State Statistics Service (Rosstat) on May 16, the country’s gross domestic product (GDP) rose by just 1.4 per cent year-on-year. This marks a steep fall from the 4.5 per cent growth reported in the previous quarter and 5.4 per cent in the same period last year. The slowdown came in below forecasts from both the Russian Economic Development Ministry, which predicted 1.7 per cent, and analysts at Bloomberg, who expected 1.8 per cent. Notably, Rosstat's quarter-on-quarter data showed the economy contracted by 0.4 per cent—its first quarterly decline since 2022—signalling growing economic vulnerability. Experts have attributed the downturn to a combination of factors, including the central bank’s high interest rate policy, persistent inflation, supply chain disruptions, and falling revenues from energy exports. From January to April, oil and gas revenues dropped by 10 per cent—a significant blow to a country that relies heavily on its energy sector. Economy in trouble? Despite the troubling first quarter, Rosstat recently revised its GDP growth estimate for 2024 upward to 4.3 per cent, citing stronger-than-expected performance in the fourth quarter. However, doubts are growing about the reliability of Russia’s economic statistics. A report by the Stockholm Institute of Transition Economics (SITE) warned that the Russian economy’s resilience is only superficial. It noted deepening structural weaknesses, unsustainable fiscal practices, and an overreliance on military-driven stimulus. Reuters reported that Torbjorn Becker of SITE pointed to discrepancies in Russia’s inflation and monetary policy data as evidence that real GDP growth may be overstated. “Russia claims inflation is 9–10 per cent. Why then is the central bank’s key rate set at 21 per cent?” he asked, arguing that understated inflation leads to inflated real GDP figures. The SITE report, presented to European Union finance ministers, further claimed that Russia’s budget deficit is likely larger than officially reported due to off-the-books war financing via the banking system. Official figures cite deficits of 2.3 per cent of GDP in 2022, 1.9 per cent in 2023, and 1.7 per cent in 2024—yet SITE estimates suggest the real fiscal shortfall could be twice as large, raising concerns about looming banking sector risks. War and sanctions compounding economic pressure The long-term impact of sanctions continues to weigh heavily on the Russian economy. The Russian Finance Ministry reportedly acknowledged “hundreds of billions of dollars” in direct losses to the financial sector, while energy export earnings fell by an estimated $78.5 billion between December 2022 and June 2024, according to the Kyiv School of Economics. Russia’s pivot to a war economy has led to a surge in military spending, but this has come at the cost of consumer sector stability. Civilian businesses are struggling under the burden of soaring interest rates and inflation. In 2024, inflation reached 9.5 per cent, and bankruptcies rose 26 per cent year-on-year in the first three quarters, totalling 6,392 corporate insolvencies, according to Interfax. Even as Moscow touts growth figures, Western analysts and institutions like the IMF are sceptical. The IMF estimates that while Russia’s economy grew by 3.8 per cent in 2024, growth will slow to 1.4 per cent in 2025 and just 1.2 per cent in 2026. Peace talks, but no ceasefire yet Adding to the uncertainty are recent developments in the ongoing war in Ukraine. On May 16, Russia and Ukraine held their first direct peace talks since early 2022, agreeing to a large prisoner swap involving 1,000 prisoners each. However, significant gaps remain, especially over the issue of a ceasefire. Ukrainian officials, backed by Western allies, have insisted on a temporary ceasefire as a first step toward broader peace. Russia has so far resisted this proposal. The two sides exchanged ceasefire proposals and discussed a potential meeting between their presidents, though no agreements were finalised. Analysts warn that any reduction in military spending following a peace deal could deliver a short-term shock to Russia’s already strained economy. Conversely, failure to reach an agreement could trigger a new round of sanctions from the West, compounding existing pressures.

Are deeper structural risks weighing Russian economy down?

The Ukraine peace talks between the US and Russia are also turning into pro-economic discussions. Representatives from Russia and the United States have initiated talks on reviving economic cooperation. Kirill Dmitriev, the CEO of the Russian direct investment fund, is at the centre of the negotiations.
According to him, US companies suffer equally from these sanctions, having lost an estimated $300 billion after exiting the Russian market. While details remain undisclosed, Dmitriev indicated that both sides are considering economic initiatives that could move forward within 2-3 months.
<h2>Impact of sanctions on the Russian economy</h2>
Russia has been severely impacted by the sanctions onslaught following the war in Ukraine. Measures include trade restrictions, freezing Russian assets worth $300 billion, and cutting Russian banks off global financial networks. Despite this, the Russian economy has survived, instead thrived, driven by military spending and 'shadow' oil revenues. The discussions in Saudi Arabia have come as a major relief for the Russian economy, which is slowly seeing the adverse effects of sanctions in the long run.&nbsp;
The question remains --- Could the US lift or ease economic sanctions on Russia? President Donald Trump has already voiced scepticism over economic sanctions. While he hinted at putting sanctions on the negotiations table to get some leverage, he also signalled a willingness to strike a broader deal.
While the Russian economy dealt with the consequences of sanctions, western brands were also in the crossfire. Many had to exit a lucrative Russian market and reassess their business priorities as geopolitical uncertainties mount.
<h2>Strategy shift for the European Union?</h2>
The European Union has not embraced the idea of opening to Russia, at least economically. The region controls most of Russia's frozen assets and has implemented 15 rounds of sanctions targeting Russian energy.
The EU will face a reality check if the US softens its stance on Russia. The union is also facing its own economic challenges, with corporations periodically highlighting the economic consequence of sanctions.
The coming months will determine whether these talks lead to a strategic realignment.&nbsp;

Business & Economy, The discussions in Saudi Arabia have come as a major relief for the Russian economy, which is slowly seeing the adverse effects of sanctions in the long run.

The Ukraine peace talks between the US and Russia are also turning into pro-economic discussions. Representatives from Russia and the United States have initiated talks on reviving economic cooperation. Kirill Dmitriev, the CEO of the Russian direct investment fund, is at the centre of the negotiations. According to him, US companies suffer equally from these sanctions, having lost an estimated $300 billion after exiting the Russian market. While details remain undisclosed, Dmitriev indicated that both sides are considering economic initiatives that could move forward within 2-3 months. Impact of sanctions on the Russian economy Russia has been severely impacted by the sanctions onslaught following the war in Ukraine. Measures include trade restrictions, freezing Russian assets worth $300 billion, and cutting Russian banks off global financial networks. Despite this, the Russian economy has survived, instead thrived, driven by military spending and 'shadow' oil revenues. The discussions in Saudi Arabia have come as a major relief for the Russian economy, which is slowly seeing the adverse effects of sanctions in the long run. The question remains --- Could the US lift or ease economic sanctions on Russia? President Donald Trump has already voiced scepticism over economic sanctions. While he hinted at putting sanctions on the negotiations table to get some leverage, he also signalled a willingness to strike a broader deal. While the Russian economy dealt with the consequences of sanctions, western brands were also in the crossfire. Many had to exit a lucrative Russian market and reassess their business priorities as geopolitical uncertainties mount. Strategy shift for the European Union? The European Union has not embraced the idea of opening to Russia, at least economically. The region controls most of Russia's frozen assets and has implemented 15 rounds of sanctions targeting Russian energy. The EU will face a reality check if the US softens its stance on Russia. The union is also facing its own economic challenges, with corporations periodically highlighting the economic consequence of sanctions. The coming months will determine whether these talks lead to a strategic realignment.

Russia eyes economic reset on Ukraine peace talks

Russian President Vladimir Putin on Thursday (March 16) mocked the United Kingdom with turnip-related snide remarks as he suggested to the West that they should go to Russia for vegetables amid a massive food security crisis.&nbsp;

In the aftermath of Russia's invasion of Ukraine last year, Western countries and others imposed limited sanctions on Moscow. The West expected to cripple Russia's economy but the country's state media claims that the economy is flourishing.&nbsp;

"Foreign analysts predicted us a depression and a decline in the consumer sector, they promised empty store shelves, a massive shortage of goods, and the failure of the service sector," Putin said while addressing the Russian Union of Industrialists and Entrepreneurs.&nbsp;

ALSO READ&nbsp;| <a href="https://www.wionews.com/world/watch-pentagon-releases-video-of-moment-russian-fighter-jet-hit-us-drone-over-black-sea-572630">Pentagon releases video of moment when Russian fighter jet hit US drone over Black Sea&nbsp;</a>

The remark appeared to be in reference to comments by British minister Therese Coffey, who last month urged to prefer seasonal, home-grown turnips as Britons are facing issues getting imported tomatoes, peppers and cucumbers in supermarkets.&nbsp;

Putin said, "Turnip is a good product, but they would also probably have to go for turnips to Russia, because our level of the harvest, after all, significantly exceeds those figures of our neighbours in Europe."&nbsp;

WATCH |&nbsp;Gravitas: Here's America's 'Plan B' for Ukraine&nbsp;

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Putin also urged Russia's billionaires to invest in new technology, production facilities and enterprises to help it overcome what he said were Western attempts to destroy its economy.&nbsp;

He claimed that "there are even more opportunities for business development and expansion, and Russian business should&nbsp;not&nbsp;miss&nbsp;this."&nbsp;

(With inputs from agencies)&nbsp;

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Russian President Vladimir Putin on Thursday (March 16) mocked the United Kingdom with turnip-related snide remarks as he suggested to the West that they should go to Russia for vegetables amid a massive food security crisis.

Russian President Vladimir Putin on Thursday (March 16) mocked the United Kingdom with turnip-related snide remarks as he suggested to the West that they should go to Russia for vegetables amid a massive food security crisis. In the aftermath of Russia's invasion of Ukraine last year, Western countries and others imposed limited sanctions on Moscow. The West expected to cripple Russia's economy but the country's state media claims that the economy is flourishing. "Foreign analysts predicted us a depression and a decline in the consumer sector, they promised empty store shelves, a massive shortage of goods, and the failure of the service sector," Putin said while addressing the Russian Union of Industrialists and Entrepreneurs. ALSO READ | Pentagon releases video of moment when Russian fighter jet hit US drone over Black Sea The remark appeared to be in reference to comments by British minister Therese Coffey, who last month urged to prefer seasonal, home-grown turnips as Britons are facing issues getting imported tomatoes, peppers and cucumbers in supermarkets. Putin said, "Turnip is a good product, but they would also probably have to go for turnips to Russia, because our level of the harvest, after all, significantly exceeds those figures of our neighbours in Europe." WATCH | Gravitas: Here's America's 'Plan B' for Ukraine × Putin also urged Russia's billionaires to invest in new technology, production facilities and enterprises to help it overcome what he said were Western attempts to destroy its economy. He claimed that "there are even more opportunities for business development and expansion, and Russian business should not miss this." (With inputs from agencies) WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

Vladimir Putin mocks West with turnip reference amid food crisis

The rouble dived around 3% against the dollar on Tuesday as market comes to terms with the prospect of lower export revenue in the wake of restrictions on Russian oil.

World Business Watch: Russian rouble slumps around 3% vs dollar as sanctions weigh

The International Monetary Fund said on Sunday that the global economic outlook is even gloomier than projected last month. It cited a steady worsening in purchasing manager surveys in recent months

WION Business News | Global economic outlook getting `gloomier`, says IMF

Russia’s invasion in Ukraine has been escalating and the economic toll of it will be felt for the next many years to come as maintaining the military onslaught costs almost $900 million each day, as per reports citing experts.&nbsp;

This figure does not take into account the money Russia has lost as a result of the economic sanctions imposed on it due to the invasion. As per the White House, sanctions may continue even if Russia withdraws its soldiers.&nbsp;

Also Read |&nbsp;<a href="https://www.wionews.com/world/uk-deploys-8000-troops-to-europe-to-deter-russian-aggression-477036">UK deploys 8,000 troops to Europe to deter 'Russian aggression'</a>

Given its military strength, Russia was looking to overrun Ukraine in the invasion. But it has had little military success to date. Forces have battled to take control of Kyiv and other cities. As per Pentagon press secretary&nbsp;John Kirby, every move by Russian soldiers has been met with stiff resistance by the Ukrainian forces.&nbsp;

Watch |&nbsp;Gravitas: European Union states block sanctions on Russia oil

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Russia’s failures have come at a high cost to the country, both financially and in term of living standards as well, though the Kremlin has remained tight-lipped regarding military deaths.

As per the reports issued two weeks after the Russian president announced the conflict, it has cost the country $7 billion in direct costs.&nbsp;

WATCH WION LIVE HERE:

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The collapse of the Russian rubble may take back the economy by up to 30 years, with predictions that Russia’s standard of living could be lowered for the next five years, reported CNBC.

(With inputs from agencies)

Russia’s invasion in Ukraine has been escalating and the economic toll of it will be felt for the next many years to come as maintaining the military onslaught costs almost $900 million each day, as per reports citing experts.

Russia’s invasion in Ukraine has been escalating and the economic toll of it will be felt for the next many years to come as maintaining the military onslaught costs almost $900 million each day, as per reports citing experts. This figure does not take into account the money Russia has lost as a result of the economic sanctions imposed on it due to the invasion. As per the White House, sanctions may continue even if Russia withdraws its soldiers. Also Read | UK deploys 8,000 troops to Europe to deter 'Russian aggression' Given its military strength, Russia was looking to overrun Ukraine in the invasion. But it has had little military success to date. Forces have battled to take control of Kyiv and other cities. As per Pentagon press secretary John Kirby, every move by Russian soldiers has been met with stiff resistance by the Ukrainian forces. Watch | Gravitas: European Union states block sanctions on Russia oil Russia’s failures have come at a high cost to the country, both financially and in term of living standards as well, though the Kremlin has remained tight-lipped regarding military deaths. As per the reports issued two weeks after the Russian president announced the conflict, it has cost the country $7 billion in direct costs. WATCH WION LIVE HERE: The collapse of the Russian rubble may take back the economy by up to 30 years, with predictions that Russia’s standard of living could be lowered for the next five years, reported CNBC. (With inputs from agencies)

Ukraine war: Russia shells out $900 million a day over 'special military operation'

Russia’s central bank governor, Elvira Nabiullina, said Friday the country’s economy would decline in the coming quarters and inflation would jump further as sanctions imposed after the invasion of Ukraine take their toll. Earlier, the bank’s board of directors held interest rates at 20%.

The bank said the dramatic doubling in interest rates Feb. 28, from 9.5%, and capital controls curbing the movement of money helped sustain financial stability in Russia and stop uncontrolled price increases. But the latest inflation data shows that, as of March 11, prices in Russia rose 12.5% from a year earlier.

Russia’s war against Ukraine has led to strict economic sanctions from the United States and Europe, encouraged a large number of Western companies and banks to retreat from the country, and isolated Russia from much of the global financial system.

“The Russian economy is entering the phase of a large-scale structural transformation, which will be accompanied by a temporary but inevitable period of increased inflation,” the Russian central bank said in a statement Friday.

Gross domestic product “will decline in the next quarters,” Nabiullina said later. Two consecutive quarters of economic decline are generally considered to be a recession.

The effect of the sanctions are being keenly felt in Russia.

“Today, almost all companies are experiencing disruptions in production and logistical chains and in their settlements with foreign counterparties,” Nabiullina said. Inflation was driven higher, she said, by a rise in demand for cars, household appliances, electronic devices and other goods as people rushed to buy because they feared prices would rise higher and supplies would run out.

The ruble has lost about 30% of its value against the U.S. dollar this year.

President Vladimir Putin of Russia put Nabiullina forward for another term as central bank governor Friday. She has held the position since 2013. Nabiullina also said Friday that stock trading on the Moscow Exchange would remain closed but government bond trading would restart Monday. Stocks haven’t traded on the exchange since Feb. 25.

Russia’s central bank governor, Elvira Nabiullina, said Friday the country’s economy would decline in the coming quarters and inflation would jump further as sanctions imposed after the invasion of Ukraine take their toll.

Russia’s central bank governor, Elvira Nabiullina, said Friday the country’s economy would decline in the coming quarters and inflation would jump further as sanctions imposed after the invasion of Ukraine take their toll. Earlier, the bank’s board of directors held interest rates at 20%. The bank said the dramatic doubling in interest rates Feb. 28, from 9.5%, and capital controls curbing the movement of money helped sustain financial stability in Russia and stop uncontrolled price increases. But the latest inflation data shows that, as of March 11, prices in Russia rose 12.5% from a year earlier. Russia’s war against Ukraine has led to strict economic sanctions from the United States and Europe, encouraged a large number of Western companies and banks to retreat from the country, and isolated Russia from much of the global financial system. “The Russian economy is entering the phase of a large-scale structural transformation, which will be accompanied by a temporary but inevitable period of increased inflation,” the Russian central bank said in a statement Friday. Gross domestic product “will decline in the next quarters,” Nabiullina said later. Two consecutive quarters of economic decline are generally considered to be a recession. The effect of the sanctions are being keenly felt in Russia. “Today, almost all companies are experiencing disruptions in production and logistical chains and in their settlements with foreign counterparties,” Nabiullina said. Inflation was driven higher, she said, by a rise in demand for cars, household appliances, electronic devices and other goods as people rushed to buy because they feared prices would rise higher and supplies would run out. The ruble has lost about 30% of its value against the U.S. dollar this year. President Vladimir Putin of Russia put Nabiullina forward for another term as central bank governor Friday. She has held the position since 2013. Nabiullina also said Friday that stock trading on the Moscow Exchange would remain closed but government bond trading would restart Monday. Stocks haven’t traded on the exchange since Feb. 25.

An economic decline is coming, Russia’s Central Bank chief says

Amid a looming default threat, Russia said it had paid $117 million interest payment amid Western sanctions.

Russia's foreign ministry said the payment was "executed" amid fears it was set to&nbsp;default over its foreign debt in over a century.

"Any default that could arise would be purely artificial in nature," Kremlin spokesman Dmitry Peskov said. The West has specifically targeted Russia's financial and banking sector after President Vladimir Putin announced his "special operation" on February 24.

Meanwhile, reports claimed JPMorgan Chase also received debt payments from Russia.

<a href="https://www.wionews.com/photos/ukraine-to-get-us-stingers-javelin-anti-armour-systems-is-it-a-gamechanger-463142">Also Read in Pics:&nbsp;Ukraine to get US Stingers, Javelin, anti-armour systems; is it a gamechanger?</a>

The Russian president had hit out against the sanctions saying: "The West doesn't even bother to hide that their aim is to damage the entire Russian economy, every Russian." Putin however admitted that "structural changes" changes were needed in the Russian economy.

The United States has also targeted the &nbsp;Russian oligarchs and those close to Putin ratcheting up pressure after Russia declared war on Ukraine.

"We want Putin to feel the squeeze, we want the people around him to feel the squeeze," the White House had said. The US also imposed sanctions on Alisher Usmanov, founder of Russian mining company Metalloinvest as the White House said he is “one of Russia’s wealthiest individuals and a close ally of Putin.”

Watch:&nbsp;16-storey building hit by missile in Kyiv

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Several other Russian billionaires have also been hit with sanctions. Putin has maintained the Ukraine operation is on course and was going "successfully" even as the US Treasury said it would continue to keep economic pressure on Russia while adding that it would target "Russian elites in order to take away resources from President Putin".

Ukrainian President Volodymyr Zelensky had earlier called for a full trade embargo against Russia as the war entered the third week.

(With inputs from Agencies)&nbsp;

Amid a looming default threat, Russia said it had paid $117 million interest payment amid Western sanctions. Russia's foreign ministry said the payment was "executed" amid fears it was set to default over its foreign debt in over a century.

Amid a looming default threat, Russia said it had paid $117 million interest payment amid Western sanctions. Russia's foreign ministry said the payment was "executed" amid fears it was set to default over its foreign debt in over a century. "Any default that could arise would be purely artificial in nature," Kremlin spokesman Dmitry Peskov said. The West has specifically targeted Russia's financial and banking sector after President Vladimir Putin announced his "special operation" on February 24. Meanwhile, reports claimed JPMorgan Chase also received debt payments from Russia. Also Read in Pics: Ukraine to get US Stingers, Javelin, anti-armour systems; is it a gamechanger? The Russian president had hit out against the sanctions saying: "The West doesn't even bother to hide that their aim is to damage the entire Russian economy, every Russian." Putin however admitted that "structural changes" changes were needed in the Russian economy. The United States has also targeted the Russian oligarchs and those close to Putin ratcheting up pressure after Russia declared war on Ukraine. "We want Putin to feel the squeeze, we want the people around him to feel the squeeze," the White House had said. The US also imposed sanctions on Alisher Usmanov, founder of Russian mining company Metalloinvest as the White House said he is “one of Russia’s wealthiest individuals and a close ally of Putin.” Watch: 16-storey building hit by missile in Kyiv Several other Russian billionaires have also been hit with sanctions. Putin has maintained the Ukraine operation is on course and was going "successfully" even as the US Treasury said it would continue to keep economic pressure on Russia while adding that it would target "Russian elites in order to take away resources from President Putin". Ukrainian President Volodymyr Zelensky had earlier called for a full trade embargo against Russia as the war entered the third week. (With inputs from Agencies)

Russia makes debt interest payment amid sanctions

Amid default fears, Russia is due to pay interest on its foreign debt on Wednesday.

President Putin on Wednesday had said that "economic blitzkrieg" against Russia had failed as he sought to assure citizens that Russian banks had overcome the "challenge".

"Working literally 24 hours a day they continue to operate citizens' payments and accountancy and ensure the activity by the enterprises," Putin said.

<a href="https://www.wionews.com/business-economy/fitch-downgrades-russias-sovereign-rating-says-default-imminent-460675">Also Read:&nbsp;Fitch downgrades Russia’s sovereign rating, says default ‘imminent’</a>

Russia had last recorded a sovereign default in 1998 when it defaulted on domestic debt and the first sovereign default on foreign currency debt since the Bolshevik Revolution in 1917.

Reports claim Russia has asked an American bank to process the payments of $117 million for two dollar-denominated bonds but hasn't heard about the financial process going through amid the sanctions. Western sanctions had targeted $300 billion Russian foreign currency reserves held abroad.

Watch:&nbsp;Russia could default on its debt within days

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President Putin had asserted that "illegitimate action to freeze part of the bank of Russia's foreign currency reserves draws a line under the credibility of so-called first-class assets" blaming the US and EU of being in "real default on their obligations to Russia".

Russia has however shifted the onus on the US saying the default depended on the US. Finance minister Anton Siluanov speaking to state media said "We have the money. We made the payment. Now the ball is in the court of the American authorities" even as he accused the West of pushing Russia towards an "artificial default".

(With inputs from Agencies)

Amid default fears, Russia is due to pay interest on its foreign debt on Wednesday. President Putin on Wednesday had said that "economic blitzkrieg" against Russia had failed as he sought to assure citizens that Russian banks had overcome the "challenge".

Amid default fears, Russia is due to pay interest on its foreign debt on Wednesday. President Putin on Wednesday had said that "economic blitzkrieg" against Russia had failed as he sought to assure citizens that Russian banks had overcome the "challenge". "Working literally 24 hours a day they continue to operate citizens' payments and accountancy and ensure the activity by the enterprises," Putin said. Also Read: Fitch downgrades Russia’s sovereign rating, says default ‘imminent’ Russia had last recorded a sovereign default in 1998 when it defaulted on domestic debt and the first sovereign default on foreign currency debt since the Bolshevik Revolution in 1917. Reports claim Russia has asked an American bank to process the payments of $117 million for two dollar-denominated bonds but hasn't heard about the financial process going through amid the sanctions. Western sanctions had targeted $300 billion Russian foreign currency reserves held abroad. Watch: Russia could default on its debt within days President Putin had asserted that "illegitimate action to freeze part of the bank of Russia's foreign currency reserves draws a line under the credibility of so-called first-class assets" blaming the US and EU of being in "real default on their obligations to Russia". Russia has however shifted the onus on the US saying the default depended on the US. Finance minister Anton Siluanov speaking to state media said "We have the money. We made the payment. Now the ball is in the court of the American authorities" even as he accused the West of pushing Russia towards an "artificial default". (With inputs from Agencies)

'Economic blitzkrieg' has failed, says Putin amid Russian default fears

The invasion of Ukraine has placed Russia on the verge of bankruptcy. Interest rates have doubled, the stock market has closed, and the rouble has fallen to its lowest level ever. Russians are now not allowed to convert money they have into foreign currency.

Russian economy to pay the price of Ukraine invasion

Elvira Nabiullina, chief of the Central Bank of Russia, is facing one of the most tumultuous phases in her career.<a name="_Hlk97459200"></a>

The technocrat-turned-economist may have steered Russia’s economy through a series of economic shocks over the past few years, but the latest sanctions announced by the West in the wake of the invasion of Ukraine are stretching her ability to keep the economy on track.

With inflation rising and the ruble plunging by more than a quarter, Nabiullina last Monday announced that the central bank’s key interest rate would more than double to a record 20 percent to curb price rises.

She admitted that the Russian economy was "dealing with a completely non-standard situation" under "conditions that have fundamentally changed".

More than her grim analysis of the economy, it was the way she spoke and her choice of clothing that caught the attention of many.

Nabiullina is well-known not only for her hawkish economic policies, but also for her symbolic attire, which hints at her policy thinking.

In May 2020, when the government urged people to stay at home, she wore a house-shaped brooch. A month later, after cutting rates, she chose a pigeon – in Russian, the word also means "dove".

But on Monday, she wore a funeral black dress to her conference, which many perceived to be a symbol of the death of the Russian economy.

Sergei Guriev, a professor of economics at Sciences Po in Paris and a leading authority on Russia, said that Monday’s coded message was to demonstrate the severity of the blow being dealt by western sanctions.

"This time she was in black and had no brooch. It should not be read as she disagreed with Putin’s policy, but as a sign that it is time to bury normal monetary policy," Guriev told the Guardian.

Analysts expect Russia’s economy could be set for a&nbsp;deeper recession this year than the one caused by COVID-19.

Sanctions freezing the central bank’s assets have severely limited Nabiullina’s room for manoeuvre. Out of $630 billion (£475 billion) in foreign currency reserves built up by the central bank – which could have been used to protect the rouble – experts say much of the sum has been rendered useless.

Many Russian economists have expressed doubts about whether she will complete her five-year term, which expires in June.

Although they say her priority could be to help protect ordinary Russians from the consequences of Putin’s actions by staying in post.

(With inputs from agencies)

Elvira Nabiullina, chief of the Central Bank of Russia, is facing one of the most tumultuous phases in her career. The technocrat-turned-economist may have steered Russia’s economy through a series of economic shocks over the past few years, but the latest sanctions announced by the West in the wake of the invasion of Ukraine are stretching her ability to keep the economy on track.

Elvira Nabiullina, chief of the Central Bank of Russia, is facing one of the most tumultuous phases in her career. The technocrat-turned-economist may have steered Russia’s economy through a series of economic shocks over the past few years, but the latest sanctions announced by the West in the wake of the invasion of Ukraine are stretching her ability to keep the economy on track. With inflation rising and the ruble plunging by more than a quarter, Nabiullina last Monday announced that the central bank’s key interest rate would more than double to a record 20 percent to curb price rises. She admitted that the Russian economy was "dealing with a completely non-standard situation" under "conditions that have fundamentally changed". More than her grim analysis of the economy, it was the way she spoke and her choice of clothing that caught the attention of many. Nabiullina is well-known not only for her hawkish economic policies, but also for her symbolic attire, which hints at her policy thinking. In May 2020, when the government urged people to stay at home, she wore a house-shaped brooch. A month later, after cutting rates, she chose a pigeon – in Russian, the word also means "dove". But on Monday, she wore a funeral black dress to her conference, which many perceived to be a symbol of the death of the Russian economy. Sergei Guriev, a professor of economics at Sciences Po in Paris and a leading authority on Russia, said that Monday’s coded message was to demonstrate the severity of the blow being dealt by western sanctions. "This time she was in black and had no brooch. It should not be read as she disagreed with Putin’s policy, but as a sign that it is time to bury normal monetary policy," Guriev told the Guardian. Analysts expect Russia’s economy could be set for a deeper recession this year than the one caused by COVID-19. Sanctions freezing the central bank’s assets have severely limited Nabiullina’s room for manoeuvre. Out of $630 billion (£475 billion) in foreign currency reserves built up by the central bank – which could have been used to protect the rouble – experts say much of the sum has been rendered useless. Many Russian economists have expressed doubts about whether she will complete her five-year term, which expires in June. Although they say her priority could be to help protect ordinary Russians from the consequences of Putin’s actions by staying in post. (With inputs from agencies)

Russian Central Bank chief noted for coded dress wears funeral black to signal death of economy

President Joe Biden's administration has prepared an initial package of sanctions against Russia that includes barring&nbsp;U.S. financial institutions from processing transactions for major Russian&nbsp;banks, three people familiar with the matter said.

The measures, which would only be implemented if Russia invades&nbsp;Ukraine, aim to hurt the Russian economy by&nbsp;cutting the "correspondent" banking relationships between targeted Russian banks and US banks that enable international payments.

While&nbsp;US&nbsp;authorities&nbsp;have said banking restrictions would be part of a package of possible sanctions, the administration's plan to&nbsp;cut&nbsp;correspondent banking&nbsp;ties&nbsp;- which underpin global money flows - has not previously been reported.

Also read |&nbsp;<a href="https://www.wionews.com/world/biden-ready-to-meet-putin-until-the-moment-ukraine-invasion-begins-454912">Biden ready to meet Putin 'until the moment' Ukraine invasion begins</a>

The United States will also wield its most powerful sanctioning tool against certain Russian individuals and companies by placing them on the Specially Designated Nationals (SDN) list, effectively kicking them out of the&nbsp;U.S. banking system, banning their trade with Americans and freezing their&nbsp;U.S. assets, the same&nbsp;sources&nbsp;said.

The White House and Treasury Department declined to comment.

The&nbsp;sources&nbsp;said the package could change up to the last minute and it was unclear who the targets would be. However, they believe top Russian financial institutions including VTB Bank, Sberbank, VEB, and Gazprombank are possible targets.

Experts consulted by Reuters said that while the correspondent banking tool lacks the punch of an SDN designation, which freezes a bank's assets, they could still deal a meaningful blow to the target&nbsp;banks&nbsp;by making it difficult to transact in&nbsp;US&nbsp;dollars, the global reserve currency.

Much of global trade is transacted in dollars.

Also read |&nbsp;<a href="https://www.wionews.com/world/former-us-secretary-of-state-mike-pompeo-to-visit-taiwan-next-week-454945">Former US&nbsp;Secretary of State&nbsp;Mike&nbsp;Pompeo to visit Taiwan next week</a>

It is unclear whether Russian&nbsp;banks&nbsp;would be added to the SDN list, but both types of sanctions could hit Russia hard.

"Since a significant number of global trade transactions are in&nbsp;U.S. dollars this is a sanction with bite, but without the more complicated and deadly sanction of being placed on the SDN list and having all assets in the&nbsp;U.S. or in the hands of&nbsp;U.S. persons frozen," said Washington lawyer Kay Georgi, who specializes in international trade.

Sources&nbsp;noted that the administration could exempt certain transactions from the restrictions if deemed necessary.

'UPFRONT COSTS'

The Biden administration has been threatening tough banking sanctions against Russia for weeks in a bid to deter Russian President Vladimir Putin from invading&nbsp;Ukraine. Moscow has amassed upwards of 150,000 troops on&nbsp;Ukraine's borders, but Putin has denied&nbsp;plans&nbsp;to launch an attack.

Peter Harrell, who sits on the National Security Council, said last month that "heavy hitting financial sanctions" were part of a strategy to hurt Russia's economy but spare its citizens.

"The goal of the financial sanctions is really to have short term upfront costs on Russia, to trigger capital flight, to trigger inflation, to make the Russian central bank provide bailouts&nbsp;to its&nbsp;banks," he said in a speech late last month.

Also read |&nbsp;<a href="https://www.wionews.com/world/did-russia-give-orders-to-attack-ukraine-us-media-cites-intel-inputs-that-were-apparently-known-to-biden-454927">Did Russia give orders to 'attack' Ukraine? US media cites intel inputs that were apparently known to Biden</a>

The tough warnings have put some&nbsp;U.S. financial firms on edge. Members of the financial services and payment industries have been in touch in recent days with the&nbsp;U.S. Treasury Department's Office of Foreign Assets Control, which administers sanctions,&nbsp;sources&nbsp;said.

Tensions grew over the weekend as Russia extended military drills in Belarus, heightening fears among Western powers of an imminent Russian invasion of&nbsp;Ukraine.

Watch |&nbsp;Gravitas Plus | Explained: The Russia-Ukraine crisis

<div class="videoWrapper trancodeVideo"><iframe allowfullscreen="" autoplay="1" class="includeVideo" frameborder="0" height="350" src="https://www.wionews.com/videos/gravitas-plus-explained-the-russia-ukraine-crisis-454859/embed" style="width:100%;max-width:560px;" width="560"></iframe></div>

Biden and Putin on Sunday agreed in principle to a summit, France said, offering hope conflict could be avoided.

British Prime Minister Boris Johnson said the United States and Britain would&nbsp;cut&nbsp;off Russian companies' access to&nbsp;U.S. dollars and British pounds if the Kremlin orders an invasion.

The Biden administration has been similarly aggressive in its rhetoric. In a briefing on Friday, Deputy National Security advisor Daleep Singh told reporters that the cost to Russia of an invasion would be "immense, both to its economy and its strategic position in the world."

President Joe Biden's administration has prepared an initial package of sanctions against Russia that includes barring U.S. financial institutions from processing transactions for major Russian banks, three people familiar with the matter said.

President Joe Biden's administration has prepared an initial package of sanctions against Russia that includes barring U.S. financial institutions from processing transactions for major Russian banks, three people familiar with the matter said. The measures, which would only be implemented if Russia invades Ukraine, aim to hurt the Russian economy by cutting the "correspondent" banking relationships between targeted Russian banks and US banks that enable international payments. While US authorities have said banking restrictions would be part of a package of possible sanctions, the administration's plan to cut correspondent banking ties - which underpin global money flows - has not previously been reported. Also read | Biden ready to meet Putin 'until the moment' Ukraine invasion begins The United States will also wield its most powerful sanctioning tool against certain Russian individuals and companies by placing them on the Specially Designated Nationals (SDN) list, effectively kicking them out of the U.S. banking system, banning their trade with Americans and freezing their U.S. assets, the same sources said. The White House and Treasury Department declined to comment. The sources said the package could change up to the last minute and it was unclear who the targets would be. However, they believe top Russian financial institutions including VTB Bank, Sberbank, VEB, and Gazprombank are possible targets. Experts consulted by Reuters said that while the correspondent banking tool lacks the punch of an SDN designation, which freezes a bank's assets, they could still deal a meaningful blow to the target banks by making it difficult to transact in US dollars, the global reserve currency. Much of global trade is transacted in dollars. Also read | Former US Secretary of State Mike Pompeo to visit Taiwan next week It is unclear whether Russian banks would be added to the SDN list, but both types of sanctions could hit Russia hard. "Since a significant number of global trade transactions are in U.S. dollars this is a sanction with bite, but without the more complicated and deadly sanction of being placed on the SDN list and having all assets in the U.S. or in the hands of U.S. persons frozen," said Washington lawyer Kay Georgi, who specializes in international trade. Sources noted that the administration could exempt certain transactions from the restrictions if deemed necessary. 'UPFRONT COSTS' The Biden administration has been threatening tough banking sanctions against Russia for weeks in a bid to deter Russian President Vladimir Putin from invading Ukraine. Moscow has amassed upwards of 150,000 troops on Ukraine's borders, but Putin has denied plans to launch an attack. Peter Harrell, who sits on the National Security Council, said last month that "heavy hitting financial sanctions" were part of a strategy to hurt Russia's economy but spare its citizens. "The goal of the financial sanctions is really to have short term upfront costs on Russia, to trigger capital flight, to trigger inflation, to make the Russian central bank provide bailouts to its banks," he said in a speech late last month. Also read | Did Russia give orders to 'attack' Ukraine? US media cites intel inputs that were apparently known to Biden The tough warnings have put some U.S. financial firms on edge. Members of the financial services and payment industries have been in touch in recent days with the U.S. Treasury Department's Office of Foreign Assets Control, which administers sanctions, sources said. Tensions grew over the weekend as Russia extended military drills in Belarus, heightening fears among Western powers of an imminent Russian invasion of Ukraine. Watch | Gravitas Plus | Explained: The Russia-Ukraine crisis Biden and Putin on Sunday agreed in principle to a summit, France said, offering hope conflict could be avoided. British Prime Minister Boris Johnson said the United States and Britain would cut off Russian companies' access to U.S. dollars and British pounds if the Kremlin orders an invasion. The Biden administration has been similarly aggressive in its rhetoric. In a briefing on Friday, Deputy National Security advisor Daleep Singh told reporters that the cost to Russia of an invasion would be "immense, both to its economy and its strategic position in the world."

US plans to cut ties with targeted Russian banks if Ukraine is invaded: Sources

Russia on Monday said that its economy contracted by 3.1 per cent in 2020 it was hit by coronavirus lockdowns and decrease in global crude oil prices. The contraction was less severe than Russian central bank's forecast of about 4 per cent. The Rosstat statistics agency attributed the drop to "restrictions imposed to combat the coronavirus and the fall in global demand for energy resources".

The 3.1 per cent drop, a first estimate, was also a relatively good result compared with many European countries that reintroduced lockdowns when a second wave of infections surged late last year.&nbsp;

<div class="videoWrapper trancodeVideo"><iframe allowfullscreen="" autoplay="1" class="includeVideo" frameborder="0" height="350" src="https://www.wionews.com/videos/gravitas-second-week-of-anti-putin-protests-at-least-5000-detained-360736/embed" style="width:100%;max-width:560px;" width="560"></iframe></div>

Spain saw an 11 per cent drop, France 8.3 per cent and Germany 5.0 per cent.

Rosstat said the Russian economy's largest losses were recorded in the hospitality, transport, culture and sport sectors. Rosstat didn't publish quarterly figures but the economy is expected to have rebounded by 7.4 per cent last three months of the year following a steep drop from April through September.

Before the pandemic hit Russia in March, its economy had grown by 1.6 per cent in the first quarter from the same period in 2019.

President Vladimir Putin had hoped 2020 would present an opportunity to revive a stagnating economy that for years has been bruised by Western sanctions.

But oil prices plunged sharply in early March, slashing Russia's energy revenues.

On Monday, Russia's coronavirus caseload stood at more than 3.8 million, the fourth-highest worldwide.

Russia on Monday said that its economy contracted by 3.1 per cent in 2020 it was hit by coronavirus lockdowns and decrease in global crude oil prices. The contraction was less severe than Russian central bank's forecast of about 4 per cent.

Russia on Monday said that its economy contracted by 3.1 per cent in 2020 it was hit by coronavirus lockdowns and decrease in global crude oil prices. The contraction was less severe than Russian central bank's forecast of about 4 per cent. The Rosstat statistics agency attributed the drop to "restrictions imposed to combat the coronavirus and the fall in global demand for energy resources". The 3.1 per cent drop, a first estimate, was also a relatively good result compared with many European countries that reintroduced lockdowns when a second wave of infections surged late last year. Spain saw an 11 per cent drop, France 8.3 per cent and Germany 5.0 per cent. Rosstat said the Russian economy's largest losses were recorded in the hospitality, transport, culture and sport sectors. Rosstat didn't publish quarterly figures but the economy is expected to have rebounded by 7.4 per cent last three months of the year following a steep drop from April through September. Before the pandemic hit Russia in March, its economy had grown by 1.6 per cent in the first quarter from the same period in 2019. President Vladimir Putin had hoped 2020 would present an opportunity to revive a stagnating economy that for years has been bruised by Western sanctions. But oil prices plunged sharply in early March, slashing Russia's energy revenues. On Monday, Russia's coronavirus caseload stood at more than 3.8 million, the fourth-highest worldwide.

Russia's economy shrinks by 3.1 per cent in the pandemic year

Alexei Navalny's poisoning may kill a major deal. Germany is threatening Russia to put a hold on Nord Stream 2, a twin gas pipeline from Russia to Germany which is now 90% complete & things hang in a balance for now.

Germany puts pressure on Russia regarding Nord Stream 2

Russia's economy was 6.4% smaller in June than a year earlier, data showed on Friday, after a sharp contraction - revised upward to 10.7% - in May, when the country partially locked-down to stop the spread of coronovirus it was done.

COVID-19 hits Russian economy, second quarter's GDP down by 9.6%

Prime Minister Mikhail Mishustin said on Tuesday that Russia’s economic stimulus plan to help the economy recover after the coronavirus outbreak and lockdown

Russia's PM announces 2-year economic stimulus plan

Russian economy contracts by 12% in April as a result of Coronavirus lockdown. Similar fall was last seen by Russia in May 2009. Watch this video to know more.

Russian economy contracts by 12% in April as a result of Coronavirus lockdown

President Vladimir Putin offered a raft of financial sweeteners on Wednesday to hard-pressed Russians after opinion polls showed trust in him has fallen to a 13-year low and almost half the population believe the country is on the wrong track.

In his annual speech to the Russian political elite, Putin set out how he planned to raise people's living standards and boost healthcare and education, promising he would find extra money to back the pledges.

Among his promises: More money for pensioners, mortgage and tax relief for families, and financial incentives for women to have more children.

Putin also laid out deadlines to close huge and sometimes apparently spontaneous landfill sites that have become a political score for the Kremlin and angered many Russians who have seen them spring up near their homes, polluting the air.

"You can't deceive people. They keenly feel hypocrisy, disrespect and any injustice. Bureaucratic red tape is of little interest to them," Putin told lawmakers and regional leaders.

"For people what's important is what has actually been done and how it improves their lives and their families' lives. We need to change the situation for the better now."

Putin also spoke of a new arms race with the United States, something that could potentially reduce funds available for social spending if it continues to escalate.

But for now, Putin said Russia was well able to afford to spend heavily on lifting people's quality of life. He said the country's foreign currency reserves covered the entirety of its external debt obligations for the first time and forecast the economy would be growing by over 3 per cent by 2021.

"...We can now invest and focus colossal, at least for our country, colossal financial resources on (Russia's) development. Nobody handed them to us, we did not borrow them - these funds were created by millions of our citizens. They (the funds) should be used to increase Russia's wealth and the wellbeing of Russian families."

Oil revenues mean Russia is not short of money. Its budget surplus this year is projected to be 1.932 trillion roubles ($29.3 billion) or 1.8 per cent of gross domestic product. Russia's foreign exchange reserves stand at $478 billion, the fifth largest in the world.

But if Putin had to scale back social spending plans to fund a wider arms race, that could further dent his ratings.

In power as either president or prime minister since 1999, Putin was re-elected last year by a landslide to another six-year presidential term. He is not under immediate political pressure and enjoys an approval rating of around 60 per cent.

But his rating used to be nearly 90 per cent and an opinion poll in January showed public trust in him had fallen to its lowest level in 13 years, while another survey showed this month that the number of Russians viewing the country as moving in the wrong direction was at its highest since 2006.

Pollsters attribute the souring mood to people fed up with six consecutive years of falling real incomes and unpopular government moves to raise the retirement age and hike value-added tax.

President Vladimir Putin offered a raft of financial sweeteners on Wednesday to hard-pressed Russians after opinion polls showed trust in him has fallen to a 13-year low and almost half the population believe the country is on the wrong track.

President Vladimir Putin offered a raft of financial sweeteners on Wednesday to hard-pressed Russians after opinion polls showed trust in him has fallen to a 13-year low and almost half the population believe the country is on the wrong track. In his annual speech to the Russian political elite, Putin set out how he planned to raise people's living standards and boost healthcare and education, promising he would find extra money to back the pledges. Among his promises: More money for pensioners, mortgage and tax relief for families, and financial incentives for women to have more children. Putin also laid out deadlines to close huge and sometimes apparently spontaneous landfill sites that have become a political score for the Kremlin and angered many Russians who have seen them spring up near their homes, polluting the air. "You can't deceive people. They keenly feel hypocrisy, disrespect and any injustice. Bureaucratic red tape is of little interest to them," Putin told lawmakers and regional leaders. "For people what's important is what has actually been done and how it improves their lives and their families' lives. We need to change the situation for the better now." Putin also spoke of a new arms race with the United States, something that could potentially reduce funds available for social spending if it continues to escalate. But for now, Putin said Russia was well able to afford to spend heavily on lifting people's quality of life. He said the country's foreign currency reserves covered the entirety of its external debt obligations for the first time and forecast the economy would be growing by over 3 per cent by 2021. "...We can now invest and focus colossal, at least for our country, colossal financial resources on (Russia's) development. Nobody handed them to us, we did not borrow them - these funds were created by millions of our citizens. They (the funds) should be used to increase Russia's wealth and the wellbeing of Russian families." Oil revenues mean Russia is not short of money. Its budget surplus this year is projected to be 1.932 trillion roubles ($29.3 billion) or 1.8 per cent of gross domestic product. Russia's foreign exchange reserves stand at $478 billion, the fifth largest in the world. But if Putin had to scale back social spending plans to fund a wider arms race, that could further dent his ratings. In power as either president or prime minister since 1999, Putin was re-elected last year by a landslide to another six-year presidential term. He is not under immediate political pressure and enjoys an approval rating of around 60 per cent. But his rating used to be nearly 90 per cent and an opinion poll in January showed public trust in him had fallen to its lowest level in 13 years, while another survey showed this month that the number of Russians viewing the country as moving in the wrong direction was at its highest since 2006. Pollsters attribute the souring mood to people fed up with six consecutive years of falling real incomes and unpopular government moves to raise the retirement age and hike value-added tax.

Putin, faced with ratings slump, offers Russians financial sweeteners

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