- Putin told Russia the nation would be fine in his New Year’s address.
- He refrained from giving a concrete outlook for the Ukraine war or Russia’s economy.
- The nation is facing growing costs from its invasion, from rising casualties to soaring inflation.
Vladimir Putin assured Russia he was “certain that everything will be fine” in his New Year’s Eve address on Tuesday, as the nation heads toward its fourth year of war in Ukraine in 2025.
In his speech, the Russian president said the nation was overcoming various challenges and would continue to move on. He also referred to 2025 as the “year of the Defender of the Motherland,” and gave respect to Russia’s “fighters and commanders,” The New York Times reported.
Still, Putin refrained from giving a concrete outlook on the war in Ukraine, or the path of the Russian economy going forward. He also did not mention Russia’s inflation struggles, one of the nation’s key economic problems.
The comments come amid swirling military and economic uncertainty in Russia, which is under increasing strain as its war against Ukraine is set to turn three years old in February.
A report from the Institute for the Study of War said that Russia suffered about 427,000 casualties in 2024 while gaining about 1,600 square miles of territory. Russia’s military slowed its advances last month, with forces gaining around seven square miles of land a day in December.
On the economic front, the costs of Russia’s invasion continue to mount. The nation has earmarked 13.5 trillion rubles for its defense spending next year, amounting to around a third of Russia’s total federal budget.
Private business activity has also been hindered by the flight of capital and younger workers who fled the nation at the start of the war. An analysis from S&P Global showed that private equity or venture capital-backed deals and investments plunged 39% from 2022 to 2023.
Inflation, meanwhile, remains well above the central bank’s 4% target, while interest rates have risen to 21%.
Putin has generally brushed off concerns about the Russian economy, but acknowledged the nation’s struggle with inflation in a recent address. In December, he acknowledged that Russia’s inflation rate was “alarming” and the economy was “overheating.”
At the end of 2023, Putin apologized for the soaring price of eggs, adding the rapid price increase was a “failure of the government’s work.”
Economists expect 2025 to be another difficult year for the country, and some predict that its economy could be headed for a period of stagnation similar to the Soviet Union in the early 1980s.
TsMAKP, a think-tank tied to the Russian government, said the nation was at risk at stagflation, a dire economic scenario that typically involves spiraling inflation, sluggish growth, and rising unemployment.
