Russia is gearing up for significant changes as it embarks on crafting its budget for 2025, with President Vladimir Putin emphasizing the symbolism and importance of the year. During the State Council meeting dedicated to family support, held on December 20, 2024, Putin remarked, "Next year we will celebrate the 80th anniversary of the Great Victory. I propose to declare 2025 the Year of the Defender of the Fatherland to honor our heroes, including both current participants of the special military operation and our forebears who fought valiantly for the Motherland across various historical periods to vanquish Nazism." This announcement signifies Russia's intentions not only to commemorate historical sacrifices but also to tighten its narrative as the nation faces economic uncertainties.
Amid this backdrop of national pride, Russia's economic outlook remains fraught with challenges. According to experts surveyed by RBC, the Russian ruble is expected to face continued depreciation risks through 2025. The currency's value began to wane dramatically following U.S. sanctions against Gazprombank and the Moscow Exchange, effective from June 2024. These sanctions have altered the dynamics of the currency market significantly, leading to heightened volatility.
Key factors contributing to the ruble's instability include imbalances between export and import flows and the struggles stemming from fluctuated oil and gas revenues. The situation is exacerbated by capital flight leaving the country, which sees companies reducing the volume of their foreign currency sales. Data indicates significant declines; November 2024 sales amounted to merely $8 billion, representing a stark 42% drop compared to the same month the previous year. Amid these challenges, the Ministry of Finance is actively purchasing gold and foreign currency, with the Bank of Russia focusing on reducing market volatility through various measures.
Looking forward to 2025, analysts anticipate external pressures affecting the ruble, particularly from projected oil prices potentially falling between $65 and $75 per barrel. This continued fluctuation is worrying for the Russian economy, as oil and gas exports are lifelines for state revenue. High reliance on these sectors makes the national currency highly susceptible to external economic conditions.
Interestingly, even as the ruble faces significant headwinds, financial products like short-term deposits have grown increasingly attractive to investors. High-interest rates make ruble-denominated deposits one of the most lucrative options for investors seeking returns during this economically tumultuous period. Investment platforms, such as Banki.ru, have reported surging interest among depositors. A recent analysis highlighted six-month deposits as particularly popular, claiming they accounted for 24% of depositor interest as of October 2024.
Among the top six-month deposit options highlighted are offerings from notable banks, including the "Moscow Credit Bank," "VTB Deposit," and "Rosselkhozbank," all aiming to capture the attention of cautious investors who are recalibrated to seek stability amid unpredictable markets. All these offerings were actively sought out as of mid-November 2024, reflecting the prevailing sentiment of cautious optimism among Russian depositors as they navigate through these economic uncertainties.
While the overarching tension between national pride and economic fragility continues to be evident, strategies aimed at propelling growth and stabilizing the economic environment will be pivotal as Russia enters the new calendar year. How effectively the administration balances these military commemorations with pressing economic needs will be closely watched both domestically and by international observers.
For many, these next steps remain laden with uncertainty, with many wondering how well the current measures will support the economy against the backdrop of geopolitical tensions and internal challenges. Russia's path forward includes contending with the dual responsibility of honoring its past heroes and securing its economic future, which may prove to be the most significant struggle of 2025.
