ХУДШИЙ СЦЕНАРИЙ/ ЖЕСТКИЕ СИГНАЛЫ НАБИУЛЛИНОЙ/ РЕЗАТЬ БУДУТ ВСЁ/ УДАР ПО МИШУСТИНУ. Милов

Summary

Michael Naki and Vladimir Milov argue that the Central Bank’s latest forecasts amount to an admission that inflation is proving harder to control than officials had expected. The Bank held its key rate at 14% and raised its inflation forecast for the year to 7.1–7.6%. It also lifted its forecast for next year’s average rate to 12.5–13.5%. In Milov’s view, businesses should not expect cheap borrowing soon. The Bank now expects inflation to return to its 4% target only after a prolonged period of tight policy, with a “neutral” rate not expected until 2029.

Inflation and economic disruption

Milov says the Bank’s warning about its worst-case scenario—supply shrinking while demand remains strong—describes conditions already unfolding. He points to high inflation expectations, tight labour markets, continued credit- and budget-supported demand, and damage to productive capacity.

The Central Bank, he says, has shifted from describing attacks on infrastructure as a temporary disruption to treating them as a lasting source of uncertainty. It cannot say when damaged capacity will be restored.

Milov also cites mounting economic costs from attacks and disruption. He estimates that airport closures under the “Carpet” plan have risen to roughly 3,000 in the first eight months of the year, around four times the previous year’s level, and says airline losses could exceed 200 billion rubles.

He argues that Rosneft’s refinery repairs are delayed by expensive, hard-to-replace equipment, limited funds, and uncertainty over whether repaired facilities will be hit again. He also says Russia is importing large quantities of costly gasoline to ease shortages, creating pressure for higher pump prices if the government cannot compensate companies.

Budget constraints and public investment

Milov sees the budget as another growing constraint. The government’s plan effectively freezes spending, while Finance Minister Anton Siluanov appears to have gained influence to impose tighter control and replenish the National Wealth Fund. Milov doubts the spending plan is achievable and expects fiscal restraint to weaken investment and economic growth.

He also interprets the removal of Deputy Prime Minister Dmitry Grigorenko, a close ally of Prime Minister Mikhail Mishustin, as potentially connected to failures in digital infrastructure and the lack of domestically available server equipment. He presents this explanation as based on reports and sources, rather than as established fact.

Sector and financial pressures

The speakers describe weakness across several sectors: Russian Railways’ freight volumes continue to fall; organized domestic tourism is reportedly down 10–30% in the autumn; and housing construction is at its lowest level in five years, with completions down about 13% year on year.

Milov also cites reports of rising late payments between companies, increasing defaults, and worsening bank asset quality, including growing arrears among developers, road builders, and mortgage borrowers. He argues that non-payments are becoming a substitute for expensive bank credit and could spread financial stress through the economy.

Bonds and gas exports

Long-term government bond yields are again around 17%, Milov notes, adding to the state’s debt-service burden and signalling market doubts about the government’s ability to control the deficit.

He also points to pressure on Russian gas exporters as the EU prepares to phase out Russian gas imports. He says Novatek chief Leonid Mikhelson has urged Europe to reconsider or delay its LNG plans.

Overall assessment

Milov’s assessment is that official optimism obscures a deteriorating economic picture: inflation remains high, borrowing is costly, the budget is tightening, infrastructure disruption is persistent, and investment is unlikely to recover under these conditions.

Presenters and contributors: Michael Naki (presenter), Vladimir Milov (guest).