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Reuters
a day ago
- Business
- Reuters
Russia's Severstal blames high rates and low prices for 55% Q2 profit plunge
MOSCOW, July 21 (Reuters) - Severstal, one of Russia's top steelmakers, blamed the high key interest rate for a 15% drop in demand for metals in the first half of 2025, which, along with low prices, resulted in a 55% fall in the company's net profit in the second quarter. Last year, the central bank hiked its key interest rate to 21%, the highest level since the early 2000s, as it fights inflation. The regulator started cutting rates last month and is expected to cut further at a rate-setting meeting this week. The central bank's tight monetary policy led to a sharp economic slowdown in Russia, with the construction industry—one of the main consumers of steel—hit particularly hard. "The second quarter of 2025 was extremely challenging for both the metals industry and the entire Russian economy," said Severstal's CEO Alexander Shevelev. The company said it will not pay dividends in order to maintain financial stability. "The high key interest rate is restraining demand for metal products, which decreased by 15% year-on-year in the first half of the year due to reduced consumption in the construction, engineering, and energy sectors," Shevelev added. Shevelev stressed that the strong rouble, which rallied by 45% against the U.S. dollar this year, was restricting its access to export markets. Shevelev earlier said that some steel factories in Russia could close down to balance the market. The company welcomed the expected interest rate cut at the meeting on July 25, stressing in its financial results' presentation that the cut will have a positive impact on the demand for steel. Net profit in the second quarter fell to 15.7 billion roubles ($200.3 million), down 55% year-over-year.
Asharq Al-Awsat
02-07-2025
- Business
- Asharq Al-Awsat
Russian Central Bank Head Warns of Turbulent Times ahead Despite Slowing Inflation
The Russian economy has adapted to Western sanctions and inflation is now slowing, but turbulent times and major technological shifts lie ahead, central bank governor Elvira Nabiullina said on Wednesday. Despite the sanctions, the Russian economy grew by 4.3% last year but is set to slow sharply in 2025, with many officials and economists saying that the current model has exhausted its growth potential. "We have adapted to some external challenges (but) no, we are facing very turbulent times ahead," said Nabiullina, who is widely credited with steering the Russian economy through the Ukraine military conflict and resulting sanctions. "But I am confident that this also presents new opportunities for development and for increasing labor productivity in conditions of expensive labor. We base our efforts on this," she told a banking conference. She stressed that the high cost of labor - spurred by the military spending that has led to a wage growth spiral in many sectors, as well as by curbs on immigration - would remain for a long time, Reuters reported. Nabiullina said the economy should in future rely entirely on domestic sources of financing as cheap funding from abroad, abundant before the Ukraine conflict, is no longer available. "In my view, structural adaptation to external constraints has been completed. We have demonstrated our ability to adapt to these challenges, but now we are facing structural shifts of an entirely new kind, primarily technological ones," she said. "They may have even more far-reaching consequences than what we experienced over the past two years," Nabiullina said, mentioning artificial intelligence applications in the economy as one such challenge. INFLATION SLOWING The central bank, which has faced heavy criticism over its tight monetary policy, began cutting its key interest rate last month as prices started to come down, helped by the rouble's strength. Nabiullina said inflation is now slowing faster than the central bank expected, and there are signs of easing in the severity of labor market shortages. She said that if economic indicators pointed to a more significant slowdown than anticipated, the central bank would have room for bolder interest rate cuts. She dismissed statements by critics of the bank, who want deeper cuts, that the cooling of the economy was excessive. Nabiullina also rejected statements from many businessman and bankers that the rouble is now overvalued and should weaken to please exporting companies, which saw their revenues shrink as the rouble rallied by over 40% against the dollar this year. "A weak exchange rate is often a sign of vulnerability, a result of chronically high inflation and a lack of confidence in one's own currency. It is hardly something to strive for," she said.
Associated Press
20-06-2025
- Business
- Associated Press
Putin boasts about Russia's economy despite recession fears
ST. PETERSBURG, Russia (AP) — President Vladimir Putin on Friday hailed Russia's economic outlook, saying it has managed to curb inflation and ease its reliance on energy exports. His optimistic account in a speech at the St. Petersburg International Economic Forum contrasted with somber statements by some members of his government who warned at the same conference that Russia could face a recession. Economic Minister Maxim Reshetnikov had said Thursday that the country is 'on the brink of going into a recession.' Putin mentioned the recession warnings, but emphasized that 'it mustn't be allowed.' He pointed out that manufacturing industries have posted steady growth, allowing the country to reduce its reliance on oil and gas exports. 'The perception of Russian economy as based on raw materials and dependent on hydrocarbons exports have clearly become outdated,' Putin said, adding that the economy grew by 1.5% in the first four months of 2025 and inflation has dropped from double digits to 9.6%. Putin has used the annual forum to highlight Russia's economic prowess and encourage foreign investment, but Western executives have shunned it after Moscow sent troops into Ukraine in 2022, leaving it to business leaders from Asia, Africa and Latin America. The economy, hit with a slew of Western sanctions, has so far outperformed predictions. High defense spending has propelled growth and kept unemployment low despite fueling inflation. Large recruiting bonuses for military enlistees and death benefits for those killed in Ukraine also have put more income into the country's poorer regions. But over the long term, inflation and a lack of foreign investments pose threats to the economy. Economists have warned of mounting pressure on the economy and the likelihood it would stagnate due to lack of investment in sectors other than the military.
Washington Post
19-06-2025
- Business
- Washington Post
Russia's economy minister says the country is on the brink of recession
ST. PETERSBURG, Russia — Russia's economy is 'on the brink of going into a recession,' the country's economy minister said Thursday, according to Russian media reports. Economy Minister Maxim Reshetnikov delivered the warning at the St. Petersburg International Economic Forum , the annual event in Russia's second largest city designed to highlight the country's economic prowess and court foreign investors.
The National
19-06-2025
- Business
- The National
Russia not in economic crisis despite 'thousands of sanctions', Deputy PM says in response to western critics
As Russia hosts a major global business conference, Deputy Prime Minister Alexander Novak responded defiantly to western critics who say his country's economy has soured. 'There is no crisis in the Russian economy,' he told T he Nationa l at the St Petersburg International Economic Forum. 'That's despite thousands of sanctions.' His comments come as the US and EU prepare new sanctions that would put Russia's oil and gas sector directly in the crosshairs. 'We proceed from the fact that our economy and our business community will work under any sanctions they come up with,' Mr Novak said. If approved, the EU's latest package would cap Russian oil exports at $45 per barrel and ban transactions on the Nord Stream pipeline. It would also prohibit Russian banks and financial institutions from operating in third countries outside the EU, which the bloc says helps Russia to avoid sanctions. The European move comes after the US Senate pushed back plans to consider a bill to impose sanctions on Russia until July. 'Despite all the thousands of sanctions and desires, the Russian economy has shown growth rates above 4 per cent annually over the past two years, significantly higher than the global average,' Mr Novak said. But that growth is beginning to slow. In the first three months of this year, Russia's GDP grew 1.4 per cent year-on-year, according to the country's federal statistics service Rosstat. That is the smallest rise since the second quarter of 2023. It has also faced stubbornly high inflation. 'Today, as a result of high growth rates, our inflation rates have increased,' Mr Novak explained. 'Today we are in the so-called economic cooling management period in order to reduce inflation.' Mr Novak said the global economy was currently facing great challenges and uncertainty, including trade wars and geopolitics factors. 'The main trend that we are noting today is the shift of the centres of economic growth to the East, primarily to the Asia-Pacific region,' he said. 'Of course, this in turn is a factor that forces western countries to take inadequate measures [sanctions and trade wars] in order to maintain their status.' While the latest crisis in the Middle East may have propped up oil prices temporarily, Mr Novak said it was 'difficult to judge' how the market would respond. He added that the 'current situation in the Middle East is like a black swan for the global economy and we do not fully understand how it can end".
