Russia's growth dips as inflation weighs on economy

MOSCOW

Russia's growth slowed in the third quarter, official statistics have shown, with high inflation caused by the Kremlin's massive spending on the Ukraine offensive weighing on the economy.

Growth in the third quarter was 3.1 percent year-on-year, down from 4.1 percent in the second quarter.

Inflation, meanwhile, came in at 8.5 percent in October, down from 8.6 percent a month earlier, but still well above the state's official 4 percent target.

Experts say the government's massive spending on the military campaign that is spurring the economy, leaving many parts of the civilian sector behind.

The International Monetary Fund recently raised its forecast for Russia's 2024 growth to 3.6 percent.

But it said the economy would slow next year to just 1.3 percent amid mounting problems.

Russia's spending on defence and security will account for 8.7 percent of GDP in 2024, President Vladimir Putin said earlier this year.

That is the highest level since the end of the Cold War.

Moscow is set to hike defence expenditure by another 30 percent next year, according to official budget plans.

The booming expenditure has shielded Russia's economy from predictions it could face a years-long recession after it ordered troops into Ukraine and was hit with Western sanctions.

But it has also triggered inflation and massive labour shortages at home.

Hundreds of thousands of men have been called up to fight, fled the country or been recruited by weapons makers, leading to a cycle of spiralling wages and prices that the central bank has warned undermines stability.