Russia faces economic squeeze as Trump pushes for peace

Despite the dynamic growth of Russia's GDP in 2023–2024, projections for 2025 indicate an economic slowdown, with expected growth of less than 1.5 percent. High wartime expenditures, which reached a record 6.3 percent of GDP in 2025, and inflation approaching double-digit figures, are significantly burdening the Russian economy.

Additionally, interest rates of 21 percent are making it difficult to access credit, which worries entrepreneurs and investors, notes Reuters.

Donald Trump, the new President of the United States, has announced a swift resolution to the conflict in Ukraine. He suggests that in the absence of negotiations with Russia, his administration will impose additional sanctions and tariffs to pressure the Kremlin.

Vladimir Putin, while appreciating the efforts of his economic officials, increasingly highlights high loan costs and an overheated economy as key challenges to address, reports Reuters.

Record wartime expenditures limit investment opportunities in non-defence sectors. Although Putin declares readiness to continue the conflict as long as necessary, the growing impact of war costs on the economy strengthens calls for a diplomatic solution. Among the critics are both entrepreneurs and some of the Russian political elite.

Kremlin spokesman Dmitry Peskov describes the economic situation as stable, though acknowledges that problems are being felt. Elvira Nabiullina, head of the Central Bank of Russia, defends the high interest rates, emphasising the necessity of combating inflation driven by massive wartime spending. Meanwhile, increasing pressure for changes in monetary policy may affect the authorities' future decisions.

Although the Kremlin has not yet publicly received concrete negotiation proposals, the upcoming actions of the Trump administration may force Russia to seek diplomatic solutions. As the costs of the war become increasingly apparent, the pressure to end the conflict may only grow, it states.