Real incomes are expected to rise as the Central Bank lowers its policy rate, Maxim Reshetnikov says

Domestic demand is expected to spur economic growth in Russia, Economic Development Minister Maxim Reshetnikov has told RBK.

Despite facing economic challenges, the Russian economy has proven far more resilient to Western sanctions imposed over the Ukraine conflict than many analysts initially predicted. Russian officials argue that the country has largely succeeded in reorienting trade toward new markets and adapting to foreign pressure.

In an interview published on Sunday, Reshetnikov said Russia's economic growth remains largely inward-oriented, while the role of exports is diminishing. According to the minister, the trend is being supported by a steady increase in real disposable incomes, which are projected to rise by 1.6% this year.

Reshetnikov attributed the trend to the gradual reduction of the Russian Central Bank's policy rate in recent months. According to the minister, lower rates are making bank deposits less attractive, freeing up more money for consumer spending, while lending activity is also recovering.

Reshetnikov told RBK that the Russian government has developed a comprehensive plan aimed at addressing global risks, including tighter sanctions, trade wars, and conflicts in the Middle East, while ensuring stable economic growth at home. The measures include additional state support for major investment projects and the creation of special economic zones.

The government is also seeking to boost labor productivity through the introduction of new technologies, artificial intelligence, and automation. Reshetnikov said the authorities plan to expand workforce participation by offering new internships, apprenticeships, and short-term training programs.

Reshetnikov added that the "balanced policy" pursued by the Central Bank and the government would allow inflation to gradually decline to a projected 5.2% by the end of 2026.

During a meeting with ministers on Friday, President Vladimir Putin pointed to "positive statistical data" for March, including a record-low unemployment rate of 2.2% and GDP growth of 1.8%.