Putin growing concerned by Russia’s economy, as Trump pushes for Ukraine deal

23/1/2025 15:39

President Vladimir Putin has grown increasingly concerned about distortions in Russia's wartime economy, just as Donald Trump pushes for an end to the Ukraine conflict, five sources with knowledge of the situation told Reuters.



Russia's economy, driven by exports of oil, gas and minerals, grew robustly over the past two years despite multiple rounds of Western sanctions imposed after its invasion of Ukraine in 2022.



But domestic activity has become strained in recent months by labour shortages and high interest rates introduced to tackle inflation, which has accelerated under record military spending.



That has contributed to the view within a section of the Russian elite that a negotiated settlement to the war is desirable, according to two of the sources familiar with thinking in the Kremlin.



Trump, who returned to office on Monday, has vowed to swiftly resolve the Ukraine conflict, Europe's biggest since World War Two. This week he has said more sanctions, as well as tariffs, on Russia are likely unless Putin negotiates, adding that Russia was heading for "big trouble" in the economy. A senior Kremlin aide said on Tuesday that Russia had so far received no specific proposals for talks.