Russian economy nightmare as Putin panics over inflation with stockmarket in freefall

President Putin is dealing with tricky economic problems (Image: Getty)

Vladimir Putin has admitted a key problem with Russia's economy as the country misses an oil target. The President underscored at a meeting with members of the Business Russia Association yesterday that one of the key issues is high inflation, according to the TASS news service. He added that the authorities need to "suppress" inflation but in such as way that does "not to freeze the economy itself." Putin added: "It is necessary to carry out such a soft, small "landing", which would allow us to achieve a situation in which the Central Bank would lower the key rate."

"How do today's main instruments work?... Loans are subsidized. This means that the higher the key rate and, accordingly, rates of banks, the greater the budget expenditure on these subsidies. This is understandable. And then the question arises, where is this boundary and which loans to subsidise?"

Russian stocks reportedly fell this morning (Image: Getty)

The Russian leader then said that the state needs to choose projects that are vital for the country and the economy, according to reports.

He added: "This is obvious. But, of course, this primarily includes such large companies on which the stability of the entire economy depends."

It comes after the Bank of Russia kept the key interest rate at 21% per annum for the fourth time in a row on April 25.

Officials also said there would be a long period of tight monetary policy, TASS reports.

Russia’s stock market went down as the main trading session started today, with the MOEX Index falling by 0.6% to 2,917.94 points, and the RTS Index losing 0.6% to 1,141.17 points, as of 10am Moscow time.

By 10am, the MOEX had extended losses to 0.73%, while the RTS was down by 0.73%.

Data has also revealed that Russia's oil production remained 17,000 barrels per day (bpd) below the production target agreed under the OPEC+ deal, according to the data presented in its April report.

This is notwithstanding that fact that it increased by 12,000 barrels per day (bpd) in April, reaching 8.981million bpd.

TASS reports that Russia was expected to produce 8.998million bpd in April.

In April, the country was required to compensate for an excess output of 6,000 bpd, which is said to have resulted in production falling short of the plan by 17,000 bpd.

According to figures, Russia’s oil output exceeded the OPEC+ target by 10,000 bpd in March.