Russia: Vladimir Potanin says the economy has not hit bottom as the Economy Ministry projects 0.6% growth

A warning from the business world

According to BFM Business, Vladimir Potanin said the Russian economy had not yet hit bottom. He made the remarks in an interview with RBC TV on Saturday, October 10. BFM Business describes him as Russia's third-richest person and the main shareholder of MMC Norilsk Nickel PJSC, which it presents as the country's largest mining group.

According to the outlet, the businessman regretted that growth is not keeping up, even though Russia is investing heavily on the Ukrainian front.

Capped growth and a widening deficit

BFM Business reports that the Russian Economy Ministry expects growth this year to be limited to 0.6%. The same ministry, according to the outlet, also anticipates a growing budget deficit, which the war is contributing to widen.

Still per BFM Business, financing the offensives in Ukraine is forcing Moscow to draw on other sectors through taxes and levies.

A windfall tax in sight

BFM Business cites the example of Vladimir Potanin's company, which will have to pay an exceptional tax of up to 30% of its windfall profits between 2027 and 2029. The outlet defines windfall profits as profits that far exceed usual earnings, driven by an exceptional event.

According to BFM Business, the magnate believes this tax risks discouraging investment and, by extension, growth.

A widening gap with the government

According to BFM Business, Vladimir Potanin heads an empire worth $22 billion according to the Bloomberg Billionaires Index. His remarks reflect, according to the outlet, a growing gap between the largest companies and the government. The government must, still according to BFM Business, ensure the country can continue to finance the war.

The outlet adds that industry giants had backed the 2024 tax reforms, on the assumption that they would remain stable until 2030. Faced with the growing deficit and this broken promise, they are becoming disillusioned, BFM Business writes.

Analysis

The facts reported by BFM Business point to a tension between two demands: the state's need for revenue, linked to the cost of the war, and the large companies' demand for tax stability. According to the outlet, Vladimir Potanin fears the new tax will weigh on investment. This reading remains that of the individual and the outlet, and the sources provided do not allow its magnitude to be measured. BFM Business also refers to another article citing flat growth, increasingly frequent fuel shortages and Russians' pessimism about their economy.