Business

On Friday, it became known that Russia's Gross Domestic Product (GDP) rose 4% in the second quarter compared to last year. The country welcomes this significant increase, claiming that Western sanctions have not weakened the country in any way.

The figures were released by national statistics agency Rosstat. But while the main driver of the Russian economy is the war effort, with a security and defence budget amounting to (roughly) 8.7% of GDP, this growth has for many months been fuelling an inflationary spiral that worries the authorities, French news medium La Dépêche reports.

Is this really good news?
In May, Russian President Vladimir Putin appointed Andrei Belooesov as head of the defence ministry, an economist with no military experience whose mission is to optimise the army's astronomical spending... However, it is difficult to achieve this goal without knowing the terrain.

According to Rosstat, prices rose 9.13% in July, further eroding Russians' purchasing power. Although Dmitry Peskov, spokesman for the Russian presidency, reiterates and confirms that "inflation control is one of our priorities", the government is still unable to curb the phenomenon and achieve the original 4% target.

Another problem? For Russia's leaders, and because of Western sanctions, it becomes extremely complicated to make payments abroad. According to Elvira Nabioullina, president of the BCR (Central Bank of Russia), these blockades could lead to an increase in the price of imported goods and push up inflation even further.

And let us not forget the labour shortage in many sectors, which still weighs heavily on companies' returns.

(SR, Fausto and Manon Pierre - Source: La Dépêche - Picture: The Presidential Press and Information Office via Wikicommons under license Creative Commons CC BY 4.0)