NO GDP GROWTH, NO INFLATION, NO WAR BY 2028 — CENTRAL BANK GOVERNOR NABIULLINA FOLLOWS US, NATO, IMF


By John Helmer, Moscow
@bears_with
The four-term (2013-2027) Governor of the Central Bank of Russia (CBR), Elvira Nabiullina, has assured the State Duma this week that the biggest enemy Russia faces is not the combined military and economic forces of the US and NATO, but over-heating in the domestic economy as it mobilizes to defend itself.
That, Nabiullina said, is not the impact of drone, missile, and bomb attacks on Russian targets inside the country, at sea, and along Russia’s international oil and gas pipelines; nor of the sanctions aimed at destroying Russian exports of energy, Russian tankers, and the fleet’s access to world markets through the Danish Straits, the Suez Canal, and the Bosphorus.
In Nabiullina’s report of her strategy for 2026-2028, drafted last month and released on October 27, the words “war” and “defence” are not mentioned. The only “geopolitical conditions” the CBR report acknowledges are “deglobalisation processes” and “new sanctions and second-round effects of enacted sanctions”. About them, Nabiullina and her advisors have concluded that the Trump Administration’s “tighter sanctions will lead to an increase in the discount for Russian exports as well as a moderate decline in oil production and exports. Oil prices will notably drop in 2026 and will not bounce back to the level of the baseline scenario even by the end of the forecast horizon.”
The forecast of the CBR, the report says, is that “if the world economy faces a financial crisis in 2026 and sanction pressure increases, the Russian economy’s potential and its growth rates will both decline. GDP will be contracting during two years. A significant decline in supply will be fuelling inflation. Fiscal policy is assumed to prop up the economy owing to a structural primary deficit. To offset a reduction in oil and gas revenues, the economy will be extensively using the resources of the National Wealth Fund, which involves the risk of depletion of its liquid part as of the end of 2026.” Nabiullina’s response, the report concludes, will be to fight the sanctions war by raising the Central Bank’s key rate from 16.5%, as it was fixed last week, to between 18% and 20%. “To prevent inflation from spiralling out of control, the Bank of Russia will be forced to pursue tighter monetary policy in 2026–2027. This will decelerate inflation to 4.0–4.5% in 2028.”
This is Nabiullina’s Trojan Horse for the Russian economy at war. The CBR projection is for two years of recession from now through 2026 and 2027; that is, close to zero growth this year to be followed by negative growth rates predicted from minus 2% to minus 3.5%.
Nabiullina admits that “considering its actual dynamics, we have lowered the GDP growth forecast for 2025 to 0.5–1.0%.” This, Russian economists point out, is within the standard margin for statistical error from zero.
Nabiullina doesn’t admit that the recession forecast in the Bank’s risk scenario for 2026-2027 is the consequence of the CBR’s key rate policy. But she does blame other government policies, including military spending, the budget deficit, and increased taxes. “Significant pro-inflationary risks have materialised since the previous meeting,” Nabiullina claims. “They are primarily associated with an increase in the budget deficit in 2025 and higher fuel prices. In September, a decline in underlying inflation measures paused. The expected increase in taxes will help bring inflation down over the medium-term horizon, but will also lead to a one-off rise in prices in the short term. We have factored this into our decision, first, by reducing the pace of monetary policy easing, and, second, by revising upward the projected key rate path required to bring inflation back to 4%.”
“As these [state spend and tax] factors fade, disinflation will continue. This will be supported by tight monetary conditions. The upward deviation of the Russian economy from a balanced growth path is narrowing.” This last sentence is the CBR euphemism for squeezing the economy with a high key rate at the same time as the government increases the tax burden. For zero to negative GDP, for growth to recession, Nabiullina’s euphemisms are “slowdown” and “cooldown”. “‘All decisions on the key rate,’ she told the State Duma this week, are based on the need to end the period of high price growth as quickly as possible while preventing the economy from overcooling. A hasty reduction in the key rate would undo all the progress achieved. ‘We would have to start all over again,’ Nabiullina said.”
Nabiullina’s promotion of “necessary recession” to cure inflation has triggered widespread but silent dismay – silent because it is understood she is protected by President Vladimir Putin.
Last month, in a session with government ministers Putin repeated Nabiullina’s line. “Last year we agreed,” the President said, “there was need to take the necessary measures to curb inflation and to strengthen macroeconomic stability. We agreed that this would inevitably cool the economy and, as we said back then, ensure its soft landing. The general opinion was also that we must walk this sharp edge and not to undermine the macroeconomic policy, not to overcool the economy, and not to freeze it.”
Putin then defended the outcome. “According to the Ministry of Economic Development, in July, gross domestic product added 0.4 percent in annual terms and in the seven months of this year GDP grew by 1.1 percent. The question is whether this is enough. Is that what we wanted? Are we succeeding in achieving the goal that we set for ourselves? Or, do we need to act differently at a faster pace, naturally, while ensuring macroeconomic, inflationary stability and taking into account the balanced policy of the Central Bank. The inflation trend is quite clear: in July, consumer prices grew by 8.8 percent and in August by 8.1 percent. The inflation drop trajectory is below the forecasts provided by the Government and the Bank of Russia. In other words, the efforts to lower inflation are effective. It is very important for moderate prices to have a positive impact on business and investment activity, allowing for more dynamic and sustainable growth.”
Vocal criticism has come from economists in the opposition seats in parliament. They say Nabiullina’s policy is stimulating financial speculation on the rouble, stocks, and commodity trade futures, boosting bank profits to record highs but crushing the real economy, and increasing poverty. According to Mikhail Delyagin, a well-known critic and deputy head of the Duma Committee on Economic Policy, the Central Bank is deliberately following the policy of Russia’s enemies, starting with the US-controlled International Monetary Fund (IMF).
“The IMF continues to act as the senior management structure for the Russian Central Bank,” Delyagin reported this month. “The Central Bank regularly — and very clumsily — tries to declare that this control is purely formal. However, these attempts are refuted by the regulatory documents of the Central Bank itself (https://t.me/EvPanina/15113 )…It turns out that a high-ranking official of the globalist structure, which oversees the Central Bank of Russia, is actively lobbying for the confiscation of Russian assets. Which has been the work of the Central Bank of Russia! The [CBR reserves] have ended up exactly where they can now be removed. An amazing coincidence…Everything is going to be fine for those who serve the West against Russia.”
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