The Duran Podcast - Russian economy, BRICS future

Episode Date: July 6, 2025

Russian economy, BRICS future

All right, Alexander, it's been a while since we've looked at the Russian economy. So how are things going with the Russian economy? Let's talk about the Russian economy. It has been about four or five months since we've discussed the Russian economy. What's going on? Right. Well, I think we have to go back to what happened last year in order to understand where we are now. Because what happened last year, the early part of last year, was that the central bank,

cut interest rates too quickly, as they've admitted too quickly, underestimating the level of pent-up demand in the economy. The result was that in the summer of last year, demand exploded. And whilst that did result in higher growth rates in the second half of last year, causing GDP in total to grow by 4.3%, which is much high, higher than the government had anticipated. But the result was higher inflation. Inflation reached, but it just went over 10%, which was too high. So Nebula did what she always does and what she is always ready to do. And this, I think, requires some explanation. She put up interest rates very high. Many people

don't understand that. They assume that if a central bank puts up interest rates to 21%, for example, that must mean that the inflation rate is much higher than the 10% that the central bank and the government are saying. It is, in fact, always nebule in his practice. She always takes action immediately to bring inflation under control. and her way of doing it is to hit inflation very hard by putting up interest rates very high. The purpose of the very high interest rates was to slow the economy and to create a balance,

to balance out the economy and to reduce demand to bring down inflation. And that is exactly what's happening over the course of this year. the economy has slowed, as it was intended to do. And inflation has been falling. It fell in April and May and June because of the statistical, you know, the statistics still tend to show inflation at around 9%. But that's because it's accumulated inflation over the year. So it's the annualized rate of inflation over the last year. the increase in prices over the last year is still around 9%.

But week by week, month by month, the actual true rate of price growth now has fallen to about 5%. In other words, it's roughly halved. And that opens up the way for interest rate reductions because what it means is that whereas As at the start of this year, interest rates were at double the rate of inflation. They're now at four times the rate of inflation. That is impossibly high. The people in industry are starting to complain about it. The central bank shaped 1% of interest rates as a signal that they intend to bring interest rates down.

and the word is that they're going to continue to do that. And we could be seeing 13 to 15% interest rates by autumn. Now that may still sound a lot by American standards, by Western standards. But it's around the sort of level that the Central Bank and Russian industry are comfortable with because you're talking about a country that has never let its debt situation get out of control. Interest payments on debt, or rather debt payments count for around 10% apparently of disposable income, which is much lower than in the West. And the debt to GDP ratio that the government is working with is just 14%

as opposed to around 100% in the West. So they can afford interest rates of around 13 to 15% with, say, 4% inflation. In fact, it helps them to accumulate capital, and it means that they can keep up high rates of investment. So we've seen the economy slow this spring and summer, which is what was intended. It will probably start to increase and put on speed again in the second half of this year. So Putin speaking at Minsk at the Eurasian Economic Forum, he said that the freezing of the Russian frozen assets and the taking of the Russian frozen assets was not theft. He said it was actually robbery.

He said theft is something that's done in the shadows. Robbery is right out in your face. and he said it's robbery. But he said, you know what, you know, if they take the Russian frozen assets, yeah, it sucks, but they're just destroying themselves. Maybe we should, we should just allow them. I mean, he didn't say allow them.

He was hinting, you know, if they take it, you know, what can we do? But at the end of the day, it's going to benefit us because they're destroying themselves. I mean, that's what he was getting at. It's almost as if Putin was saying, if the price that we have to pay as Russia and as bricks in the multipolar world is losing $200 billion or $250 billion in order to finally be done with the Collective West financial sanctions system, then so be it. Yeah.

That's exactly what he said. By the way, he's absolutely bright. Theft is covert. Robbery, like armed robbery, when, you know, you burst into a bank. you know, get the people in the bank to give you the money. That is done in the open. That is the classical difference between robbery and theft, just to say, food in the lawyer. I always say this.

He is a very legalistically minded person. And in fact, he alluded to that fact when he made those comments at the meeting. But you're absolutely right. You're absolutely right. He did go on to say that, you know, Obviously, it's not good if they steal our assets or rob us of our assets in that kind of way. But ultimately, this is for Russia, something that they see in the mirror now. It's what lies behind them.

What lies ahead of them is the new payment systems that they created. And it turns out that most of the work on creating the BRICs payment systems was actually done by Russian universities. I didn't know this, but it turns out that it's the Russians who have been doing most of the hard work on this, speaking, discussing it with the Chinese and the Brazilians. So these are Russian devised systems. And from a Russian point of view, you know, this is, this works very, very much better. It means that, you know, they're finally rid of dependence on the collective West. They no longer has to worry about investment flow. and the West, they no longer have to worry about what the West says their credit rating is,

which may bear no relation to the actual fiscal and realities in Russia. They could just go ahead and make their own decisions and build up their economy and increase their growth rate. And they're pretty confident that they'll be increasing their growth rates. And as I said, it's a problem of the past, but it's a problem of the past, but it's, It's not a problem of the future. All right, we will end the video there. The durand.locals.com.

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