Putin is ‘increasingly concerned’ about status of russia’s economy

Putin is ‘increasingly concerned’ about status of russia’s economy

Domestic economic activity has become strained in recent months by labour shortages and high interest rates introduced to tackle inflation; Putin is ‘ready’ to discuss ceasefire options but wants Russia’s territorial gains in Ukraine to be accepted.

President Vladimir Putin has grown increasingly concerned about distortions in Russia’s wartime economy, just as Donald Trump pushes for an end to the Ukraine conflict, five sources with knowledge of the situation have said.

Russia’s economy, driven by exports of oil, gas and minerals, grew robustly over the past two years despite multiple rounds of Western sanctions imposed after its invasion of Ukraine in 2022.

But domestic activity has become strained in recent months by labour shortages and high interest rates introduced to tackle inflation, which has accelerated under record military spending.

That has contributed to the view within a section of the Russian elite that a negotiated settlement to the war is desirable, according to two of the sources familiar with thinking in the Kremlin.

Mr. Trump, who returned to office on Monday, has vowed to swiftly resolve the Ukraine conflict, Europe’s biggest since the Second World War.

This week, he has said more sanctions, as well as tariffs, on Russia are likely unless Mr. Putin negotiates, adding that Russia was heading for “big trouble” in the economy. A senior Kremlin aide said on Tuesday Russia had so far received no specific proposals for talks.

“Russia, of course, is economically interested in negotiating a diplomatic end to the conflict,” Oleg Vyugin, former deputy chairman of the Central Bank of Russia said in an interview, citing the risk of growing economic distortions as Russia turbo-charges military and defence spending.

Mr. Vyugin was not one of the five sources, who all spoke on condition of anonymity due to the sensitivity of the situation in Russia.

Reuters has previously reported that Mr. Putin is ready to discuss ceasefire options with Mr. Trump but that Russia’s territorial gains in Ukraine must be accepted and that Ukraine must drop its bid to join the U.S-led NATO military alliance.

Kremlin spokesperson Dmitry Peskov acknowledged “problematic factors” in the economy, but said it was developing at a high rate and was able to meet “all military requirements” as well as all welfare and social needs.