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<ul class="summary-list"><li>Spy mania in Russia has created an environment that's stifling innovation, sources told BI.</li><li>Arrests for treason in Russia have soared, human rights experts said.</li></ul>Ivan Pavlov, a Russian-born lawyer who now lives in Europe, was 51 was he was forced to leave his home country. After years of representing Russians who had been accused of treason, he was put on the nation's wanted list and labeled as a "foreign agent" in 2021 — a term that, in Russia, is equated with spy, according to the <a target="_blank" href="https://www.hrw.org/news/2022/12/01/russia-new-restrictions-foreign-agents">Human Rights Watch</a>.Eventually, he knew he had to flee, he told Business Insider in an interview."All my professional life was in Russia," he said. "My family was inside Russia and it was a huge [suffering]."The arrest of accused "spies" has risen dramatically since Moscow began its invasion of Ukraine, Pavlov and other human rights experts told BI.That could end up having a big knock-on effect on Russia's already-weakened economy. Possible impacts include decreased investment, decreased consumption, and slower growth as Russia shifts away from a capitalistic society, Richard Portes, an economist from the London Business School, says."You do have an inhibition on risk-taking, innovation," Portes told BI on the intensifying pursuit of foreign agents in Russia. "For those who remain, you're not going to get any dynamic economic activity. Aside from the <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-outlook-ukraine-war-worker-shortage-population-brain-drain-2024-8">brain drain</a>, aside from the drain of young people, you're not going to get any innovation. And I think that's the medium-term consequence of all this: disastrous."Sergei Guriev, another economist who was deemed a "foreign agent" by the Russian government, agrees the crackdown on perceived security threats could hurt the country economically.He used the example of Russia recently <a target="_blank" class="" href="https://www.businessinsider.com/russia-arrests-3-hypersonic-missile-scientists-for-treason-2023-5">arresting some of its missile scientists</a>, which has made others in the scientific community fearful of publishing new research, he said."We can expect that it should impact economic growth," he added, though he noted the effect may not be immediately felt.Russia's economy is showing some signs that the kind of risk-taking associated with innovation and entrepreneurship is on the decline. Innovation in Russia has fallen behind the nation's level of development, according to a <a target="_blank" href="https://www.wipo.int/web-publications/global-innovation-index-2024/assets/67729/2000%20Global%20Innovation%20Index%202024_WEB2.pdf">2024 ranking</a> from the World Intellectual Property Organization. Patent filings fell 13% in Russia in 2022, while patent filings from foreign applicants dropped 30%, according to data from the <a target="_blank" href="https://rospatent.gov.ru/content/uploadfiles/otchet-2023.pdf">Russian Patent Office</a>.Russia minted just 240,458 new LLCs in 2022, about half of the number of new companies that registered in 2015, according to the <a target="_blank" href="https://www.worldbank.org/en/programs/entrepreneurship">World Bank entrepreneurship</a> database.Private investment in Russia is also down. Private equity and venture capital-backed M&amp;A deals and funding rounds in Russia dropped around 39% from 2022 to 2023, with the nation seeing just <a target="_blank" href="https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/2-years-on-private-capital-flees-russia-builds-slowly-in-ukraine-80421379">$1.4 billion</a> of those types deals last year, according to S&amp;P Global data. Merger and acquisition deal value as a whole also dropped 71% to $6.41 billion, down from $22.48 billion the prior year.<a target="_blank" href="https://rosstat.gov.ru/storage/mediabank/132_28-08-2024.html">Corporate profits</a> in Russia also dropped around 6% in the first half of the year in 2024. Meanwhile, profits from Russia's professional, scientific, and technical activities dropped around 19% over the first half of this year compared to the same period a year ago, Rosstat data shows.These outcomes are partly influenced by a more restrictive environment in Russia, Portes said, in addition to some of Moscow's other challenges, like <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-outlook-stagflation-recession-inflation-gdp-growth-ukraine-war-2024-9">high inflation</a> and the <a target="_blank" class="" href="https://www.businessinsider.com/russian-economy-brain-drain-labor-shortage-workforce-exodus-capital-flight-2023-9">flight of some of its most educated</a> workers."The longer-term consequences, the medium-term consequences, are hollowing out [the economy]," he said. "It's very sad, but that's what it is."<h3 id="c673f304-1ae4-43f5-81a2-d4145eb78dc1">Moscow's spy mania</h3>The number of Russians being accused of treason has skyrocketed in recent years, Guriev says. He estimates that over 100 people each year are now being arrested for treason. That's likely because Russia's government is focused on creating an "atmosphere of fear," and "paralyzing resistance" amid the war in Ukraine, Pavlov said.Constant fear of persecution doesn't mix with a capitalistic society, Portes says."The thing about capitalism — capitalism has its defects for sure — but it works because it gives incentives to people to take risks," he said. "The circumstances of a country that's like what Russia is right now, the incentive to take risks, there is a strong disincentive".Other experts have noted that Russia looks to be <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/russia-economy-ukraine-war-tech-reverse-industrialization-central-bank-finland-2023-3">drifting away</a> from a capitalist structure, particularly as it boosts public spending to fund its war efforts in Ukraine.Previously, Portes predicted that Russia was on its way to being reduced to a "<a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-outlook-ukraine-war-worker-shortage-population-brain-drain-2024-8">natural resource economy</a>." That could lead to a lower quality of life for Russians, he predicted, hitting the nation with sluggish economic growth and a decline in everything from education to medical care.Moscow's economy isn't necessarily at risk of collapse, thanks to <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-ukraine-war-moscow-military-spending-inflation-worker-shortage-2024-2">hefty government spending on the war</a>, Portes says, though he still sees a dark economic future ahead of the nation."It's a disaster. We have plenty of examples in history where a war economy can keep on going, even though everything is crumbling around it. And I think that's what you have now," he added.

How national security panics in Russia could stifle innovation and hurt its economy

India’s Chief Economic Advisor (CEA), <keyword id="20690607" type="General" weightage="20" keywordseo="V-Anantha-Nageswaran" source="keywords">V Anantha Nageswaran</keyword>, remains optimistic about the nation’s economic prospects despite a slower-than-expected <keyword id="19972825" type="General" weightage="20" keywordseo="GDP-growth" source="keywords">GDP growth</keyword> in the second quarter of FY2024-25. Speaking at the Bharat @100 Summit hosted by Assocham, he said that the fundamental health of the economy remains robust, according to a report by aNI. Nageswaran highlighted several indicators demonstrating the economy’s resilience. “If you run through the checklist for the <keyword id="19948184" type="General" weightage="100" keywordseo="Indian-economy" source="keywords">Indian economy</keyword>, the health is pretty robust,” he noted, pointing to controlled levels of external debt as a share of GDP, declining non-performing assets in the banking system, and stable inflation trends. Although certain food items have caused inflationary spikes, their impact is limited within the overall consumer price index basket, he explained. The CEA praised the shift in fiscal expenditure priorities over the past seven years, with greater focus on capital investments rather than revenue spending. This reallocation, he suggested, has bolstered long-term economic stability and growth potential. India’s GDP growth for the July-September quarter was 5.4%, significantly below the Reserve Bank of India’s forecast of 7%. While this has sparked concerns among economists, Nageswaran urged against overreacting. Erratic monsoons and excessive rainfall disrupted economic activity in Q2, he explained, while global uncertainties and supply chain pressures further weighed on growth. Despite these challenges, he maintained confidence in the broader growth narrative, citing improvements in key economic metrics. For instance, India’s gross capital formation has risen from 27.3% of GDP in the second decade of the 2000s to 30.8% today. Private consumption remains steady, and exports—spanning both services and manufacturing—continue to perform well even amid challenging global conditions. Nageswaran also underscored India’s growing competitiveness in international trade. He noted that the nation’s total <keyword id="24325087" type="General" weightage="20" keywordseo="exports-as-a-percentage-of-GDP" source="keywords">exports as a percentage of GDP</keyword> now surpass China’s, showcasing its resilience and adaptability in a shifting global trade environment. However, he cautioned against reading too much into quarterly fluctuations, highlighting the impact of geopolitical developments such as trade restrictions from the US on critical minerals and rare earths, as well as policy shifts in China. These external factors, he suggested, are likely to persist and may continue influencing short-term economic trends. (with ANI inputs)

Indian economy is resilient despite Q2 challenges, says CEA Nageswaran

<ul class="summary-list"><li>Spain is looking to immigrants to help boost its economy.</li><li>Spanish Prime Minister Pedro Sánchez has said migration is crucial for the country's prosperity.</li></ul>Spain is looking to immigrants to help boost its economy and fill gaps in its workforce.Speaking to parliament on Wednesday, Spanish Prime Minister <a target="_blank" class="" href="https://www.youtube.com/watch?v=ZqbRYeyo4cs">Pedro Sánchez</a> promoted migration as a means of fueling prosperity in the country, arguing that it offered an effective way of tackling what he called a "demographic challenge."Spain's economy and labor market face significant challenges from an aging population and low birth rate.Eurostat data put Spain's birth rate at 1.16 births per woman in 2022, the second-lowest in the EU, while the Spanish central bank has said that population aging is "one of the greatest structural challenges facing the Spanish economy."Sánchez said that migration may offer the answer to those problems, saying it had historically been one of "the great drivers of the development of nations.""Spain needs to choose between being an open and prosperous country or a closed, poor country," he added.Sánchez also used his speech to dispel certain myths and "disinformation" about immigrants, saying that "hatred and xenophobia have been — and are — the greatest destroyer of nations.""The reality, ladies and gentlemen, is that foreigners are neither better nor worse than us. They are equal. They are people with their virtues, their defects, their dreams, and their fears," he said.It comes as other EU members have sought to clamp down on immigration.Germany has tightened border controls to tackle irregular migration, while <a target="_blank" class="" href="https://www.government.se/government-policy/swedens-new-migration-policy/">Sweden</a> and <a target="_blank" class="" href="https://www.theguardian.com/world/2024/sep/17/doctors-criticise-finlands-proposal-to-withhold-healthcare-for-migrants">Finland</a> have both announced anti-immigration plans.In the US, the run-up to the presidential election has also seen immigration come under the spotlight.<a target="_blank" class="" href="https://www.businessinsider.com/trump-mass-deportation-immigraiton-plan-federal-reserve-inflation-2024-9">Former President Donald Trump</a> has drawn particular attention to the issue, often using inflammatory rhetoric to describe immigrants.Trump has also vowed to enact the "largest domestic deportation in American history" should he be elected in November.

Spain is betting on immigrants to boost its economy 

<ul class="summary-list"><li>A port workers' strike from Maine to Texas could deliver a major hit to the US economy.</li><li>The key to how much damage is done will be how long it lasts, logistics experts told BI.</li></ul>A strike involving port workers from Maine to Texas could inflict <a target="_blank" href="https://www.businessinsider.com/port-strike-impact-costs-us-economy-recession-outlook-shipping-delay-2024-10">major damage</a> to the US economy.How high the economic wreckage piles up will depend on how long dockworkers are on the picket lines, logistics experts told Business Insider.A strike lasting a week or two would create backlogs but would carry minimal economic costs outside of areas that depend on port activity, according to Adam Kamins, an economist at Moody's Analytics.But "anything longer will lead to shortages and upward price pressures," Kamins said. He noted that shipment of food and automobiles could take a big hit, in particular, because they tend to move through the affected ports where some 45,000 workers are striking for better wages, among other demands.Kamins said a jump in inflation isn't likely even with a longer strike. But he added that if prices start to heat up, that could make the Federal Reserve "more cautious" about trimming interest rates. The <a target="_blank" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9">Fed lowered rates</a> in September for the first time in four years following its effort to knock down price growth, which surged during the pandemic.Kamins said hesitation by the Fed to continue cutting would cloud the forecast for job growth and investment.<h2 id="60559bea-01d9-4eff-95d7-2b08ead5ce48">Ports are already feeling the effects</h2>The strike is the first to affect an entire US coast since 1977, and it's already disrupting commerce. As of Tuesday morning, more than 38 container vessels were anchored near affected ports, including Savannah, Georgia, Charleston, South Carolina, Norfolk, Virginia, and New York, according to Mirko Woitzik, director of intelligence solutions at Everstream Analytics. That's up from 21 on Monday and three on Sunday.The affected ports involve about half of the <a target="_blank" href="https://www.reuters.com/world/us/us-east-coast-port-strike-looms-tuesday-with-no-talks-scheduled-2024-09-30/">nation's ocean shipping</a>. Analysts at JPMorgan have said the price tag for shutdowns related to the strike could reach <a target="_blank" href="https://www.politico.com/news/2024/09/27/port-strike-harris-biden-trump-election-00181319">$5 billion a day</a>.Travis Tokar, a professor of supply chain management at Texas Christian University's Neeley School of Business, told BI that if a strike lasts more than a couple of days, there will likely be notable shortages at grocery stores."It all comes down to how quickly this ends up getting resolved," Tokar said.If the industrial action persists, he said, shoppers could soon face a harder time finding a variety of fruits and vegetables, including bananas and kiwis. He said meat, seafood, eggs, coffee, chocolate, and alcoholic beverages could also be affected. Beyond food, there could be delays involving automobiles, car parts, clothing, and furniture, Tokar said.<h2 id="1ca280fe-1790-4e9b-8da5-e5692f80fac8">Spiking shipping costs could push up food prices</h2>Tokar said that even if some foods remain available, consumers could notice a difference in costs as companies pass along higher shipping expenses."The prices will be very high as those shippers have to find alternate routes," he said. "That's going to add a lot of costs."One of the biggest hurdles for businesses will be even finding alternate routes. He said some things could be rerouted to West Coast ports, but that's expensive and time-consuming. And alternate routes are likely to get busier as a result of the strike.Sending goods by air would likely be, at minimum, about four times as expensive, Tokar said. That's before any price hikes that might occur if too many businesses rush to claim limited cargo space. And going by air wouldn't work for high volumes of freight, he said.Tokar also said that many businesses and shippers might not have had the wherewithal to rejigger their supply lines before the walkout. Given that it's been decades since a major strike unfolded on the East Coast, he said, many companies were also likely caught off guard.Beyond that, he said, even if shippers had wanted to get ahead of a strike, they might not have had the funds available to purchase extra inventory ahead of time or a place to put it. Plus, shippers and companies can only store perishable goods for so long before they spoil."There's just a limit to what companies can do even if they see the dumpster fire on the horizon," Tokar said.

The countdown is on for a strike that could wreck the economy

As the vibrant <keyword id="19896655" type="General" weightage="20" keywordseo="wedding-season" source="keywords">wedding season</keyword> kicks off in India soon, the <keyword id="19921618" type="General" weightage="20" keywordseo="Confederation-of-All-India-Traders" source="keywords" meta.keywordsubtype="org" meta.entityname="Confederation of All India Traders" meta.hostid="261" meta.entityid="Confederation of All India Traders">Confederation of All India Traders</keyword> (<keyword id="20143308" type="General" weightage="20" keywordseo="CAIT" source="keywords" meta.keywordsubtype="org" meta.entityname="CAIT" meta.hostid="261" meta.entityid="CAIT">CAIT</keyword>) has set an optimistic forecast, projecting a windfall for the nation’s economy. According to a recent CNBC report, CAIT predicts that this year, an estimated 48 lakh weddings are expected to take place in November and December, potentially generating a whopping ₹6 lakh crore in business. This surge reflects not just the volume of weddings but the wide-scale economic impact that accompanies such celebrations. Weddings in India are known for their grandeur, with celebrations often spanning several days and involving a number of services, from event planning and catering to jewellery purchases and attire. CAIT’s recent prediction, thus, underscores the vital role that the wedding season plays in the retail market. In this year’s cycle, the retail sector alone is poised to see a turnover of ₹5.9 lakh crore, highlighting the deep interconnectedness between cultural traditions and economic activity. In Delhi, which stands as one of the top locations for extravagant weddings, the expected impact is particularly significant. Approximately 4.5 lakh weddings are projected in the capital city, potentially contributing around ₹1.5 lakh crore to the local economy. This surge benefits a variety of sectors, including hospitality, fashion, gold and jewellery, and even technology, as digital services and e-invitations become more prevalent. The build-up to this wedding season has already shown signs of economic revival, particularly in sectors like gold and jewellery. Suvankar Sen, MD &amp; CEO of Senco Gold, noted a marked increase in wedding-related purchases during the recent Dhanteras festival. Speaking in an interview with CNBC TV-18, Sen highlighted that the August duty cut on gold played a significant role in spurring early buying behaviour. He pointed out that this policy move helped lower the cost of gold, enticing consumers to make significant purchases ahead of the peak wedding months. "We can see at least 40-50% of the consumers who are buying right now are related to weddings, and the 40-50% who are not related to weddings, are divided amongst consumers with a budget of ₹2-3 lakh buying some kind of jewellery as an annual buying during this auspicious time. Some consumers are buying working women's jewellery or lightweight for their daughters, something within ₹50,000 to ₹1 lakh kind of buying happening. ₹20,000-30,000 is a budget consumer at all levels, some kind of a pendant, ring or earring that everyone would like to buy during this auspicious time. So, this is how we are seeing the consumer," he added. This early momentum has translated into packed showrooms and increased consumer spending, signalling a robust start to wedding-related commerce. Retailers across India are now preparing for a flurry of activity, restocking inventory and expanding service offerings to meet the anticipated demand. From wedding attire and décor to luxury items like high-end electronics and custom-made invitations, the shopping lists are extensive, promising a lucrative time for businesses. While traditional sectors such as fashion, catering, and venue rentals will see a boom, new trends have also emerged, expanding the <keyword id="23787664" type="General" weightage="20" keywordseo="wedding-economy" source="keywords">wedding economy</keyword>. The demand for eco-friendly and sustainable wedding practices has grown, with couples seeking biodegradable décor and eco-conscious catering services.

Indian weddings expected to generate ₹6 lakh crore in two months, CAIT says

<ul class="summary-list"><li>The economy is at a decisive moment, and Friday's jobs report may provide answers.</li><li>The last jobs report brought an unpleasant surprise when unemployment jumped up, causing the stock market to plunge.</li></ul>Friday's jobs report is a big one.That's because the US economy is at a critical point. The next batch of data could be a key indicator of whether the economy is sticking the <a target="_blank" class="" href="https://www.businessinsider.com/recession-prediction-soft-landing-goldman-sachs-us-economy-volatility-inflation-2024-8">soft landing or heading into a recession</a>.It'll also point toward how big the nation's central bank will go <a target="_blank" href="https://www.businessinsider.com/interest-rate-cuts-wall-street-how-much-jackson-hole-fed-2024-8">on interest rate cuts</a> in its <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-likely-september-federal-reserve-holds-steady-july-2024-7">September 18 meeting</a>. While it's looking almost certain that the rate cuts Americans have been hoping for will finally happen, the question is how deep those cuts will go.So let's paint two scenarios, based on Friday's report, and both come down to one number.If the unemployment rate spikes again — as it did in <a target="_blank" class="" href="https://www.businessinsider.com/unemployment-rate-job-growth-july-labor-market-economic-data-2024-7">July's report </a>— the stock market could plunge, mirroring what happened after that unwelcome surprise. Unemployment above July's 4.3% could indicate that the jobs market is in even more dire straights and the chances of a coming recession could go higher. Additionally, the Fed could decide to cut rates even deeper than the expected 25-basis-point cut.On the other hand, if unemployment dips to 4.2% or below, it could be an indication that July's shockingly large increase was a blip and the job market isn't on a steep decline. The Fed could announce a 25-basis-point cut — the <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">most likely scenario</a>, according to market predictions — which will mean that while the economy is cooling, it doesn't need drastic intervention on its way to a soft landing.The upcoming jobs report will clarify which of those two roads the Fed thinks we're on."It's really an opportunity for them to focus on the labor market and make sure that they are not inducing a more dramatic slowdown," Aaron Terrazas, chief economist at Glassdoor, told Business Insider.<h2 id="055a6f9d-c7c2-49a7-9322-c744c1fa5d7d">A golden path or Recessionland</h2>The Federal Reserve has held steady on interest rates for around a year — a decision called into question after July's disappointing jobs report.The Fed will likely be using the upcoming data to determine whether July's weak employment numbers persist and are indicative of a recession or if that was just a bump in the road and the economy can carry on into the coveted soft landing."We've got to be thinking about where will we need to be to pull off what I call the golden path, which is to get inflation down from these epic heights to something like our target without having a serious recession," Chicago Fed President Austan Goolsbee told BI. "And so far, we did that in 2023. This looks like a little bit of that magic dust. It has carried over into 2024, but there's weakening on the labor market side and so we've got to be attentive."Still, a 50-basis-point cut isn't guaranteed even if Friday's job gain and unemployment rate data are weak."I think the Fed will want to avoid being seen as excessively data-point dependent so that there would need to be a significant degree of weakness, very low payroll growth, or potentially a decline, and an increase in the unemployment rate for policymakers to suggest 50 basis points as the first rate cut," Gregory Daco, the chief economist of EY, told BI.While the size of a rate cut is in question, Federal Reserve Chair Jerome Powell <a target="_blank" href="https://www.businessinsider.com/interest-rate-cuts-are-coming-federal-reserve-jackson-hole-powell-2024-8">all but confirmed an interest-rate cut</a> in September during his keynote speech at Jackson Hole last month and indicated that the Fed will be closely watching the incoming jobs data, saying that "the inflation and labor-market data show an evolving situation. The upside risks to inflation have diminished. And the downside risks to employment have increased."July's unemployment rate of 4.3% was the highest since October 2021. A slight dip in this rate is expected for August, the forecast on <a target="_blank" class="" href="https://www.investing.com/economic-calendar/unemployment-rate-300">Investing.com</a> showed, and job growth is expected to tick up.Terrazas said the question among economists right now is just how big of a cut the jobs report could prompt."If we do get a weak report, then I think 50 basis points is very clearly on the table," Terrazas said.David Kelly, J.P. Morgan Asset Management's chief global strategist, thinks the Fed will cut rates in September and December — both times being 25 basis point cuts."A payroll gain of less than 100,000 or a rise in the unemployment rate to 4.4% or above would make a 50 basis point cut in September likely," Kelly told BI in a statement about the upcoming labor market report.New data out Wednesday from the Bureau of Labor Statistics showed job openings fell for the second straight month in July, and the number of hires increased slightly."If we continue to get labor market data like today's report, then the pace of cutting is likely to be quick," Nick Bunker, economic research director for North America at the Indeed Hiring Lab, said on Wednesday. "Hopefully, the labor market can level off and a more deliberate pace of cuts can be undertaken. But the underlying trends in the data suggest that might not be the reality."The Fed likely will also be considering the path of inflation as it decides how much to cut rates. Inflation has cooled and is now hovering just a little above the Fed's 2% target. New consumer price index data, an inflation measure, will be released before the FOMC meeting.Inflation and the labor market have both cooled, <a target="_blank" href="https://www.businessinsider.com/jobs-unemployment-interest-rates-economy-recession-soft-landing-2024-8">but the much-sought soft landing could be in trouble</a>. A recession isn't here either — even if some widely followed <a target="_blank" href="https://www.businessinsider.com/sahm-rule-recession-unemployment-federal-reserve-interest-rates-cut-2024-8">recession indicators</a> have started to sound the alarm."I think the US economy is softening but not soft," Daco said.Goolsbee also emphasized the importance of looking at the data over time rather than a single point, and he noted that even if the Fed does start cutting rates this year, "the mission of the central bank is never done.""There is no declaring mission accomplished," he said. "It's a mistake to do that."Will an interest rate cut impact your life or finances? Contact these reporters at <a target="_blank" href="mailto:mhoff@businessinsider.com">mhoff@businessinsider.com</a>, <a target="_blank" href="mailto:asheffey@businessinsider.com">asheffey@businessinsider.com</a>, and <a target="_blank" href="mailto:jkaplan@businessinsider.com">jkaplan@businessinsider.com</a>.

The economy is at a fork in the road

<ul class="summary-list"><li>Russia is facing the mounting risk of stagflation, a think tank tied to the Kremlin said.</li><li>The nation's high interest rates will trigger an economic a downturn while inflation remains high, TsMAKP said.</li></ul>Moscow's failed attempt to stamp out inflation is driving the country towards its worst-case economic scenario, according to a Russian think tank tied to the government.On Wednesday, TsMAKP condemned Russia's tight monetary policy, warning that high interest rates will trigger an economic downturn. With inflation still running hot, that could create a nightmare outcome for Kremlin officials: stagflation."As a result of the central bank's actions, the Russian economy is effectively facing the threat of stagflation — simultaneous stagnation or even recession and high inflation," the government advising think tank said, as <a target="_blank" href="https://www.reuters.com/world/europe/pro-government-economists-blame-central-bank-plunging-russia-into-stagflation-2024-11-13/">translated by Reuters</a>.This scenario, where growth is low and inflation high, is most feared by any central bank.Stagflation is harder to escape than a recession. When an economy typically slows down, central banks can loosen interest rates to revive activity. But that option disappears if inflation keeps rising: interest rates must stay high to cool price growth.Put simply, the Kremlin's hands appear to be tied.Russia's central bank has already sensed the <a target="_blank" href="https://www.businessinsider.com/russia-economy-outlook-stagflation-recession-inflation-gdp-growth-ukraine-war-2024-9">looming risk of stagflation</a>, citing that price growth remained stubbornly high in the first half of 2024 despite cooling domestic demand.To that end, the bank elected to raise Russia's key interest rate to a record high of 21% last month, and indicated more to come.So far, however, high interest rates have shown limited impact on Russia's inflation rate, which hit 8.63% in September. Though annual inflation slowed to <a target="_blank" href="https://tass.com/economy/1871947">8.54% in October,</a> food prices continue to soar. That includes Russian staples such as the potato, which is up <a target="_blank" href="https://www.businessinsider.com/russia-economy-inflation-potatoes-butter-central-bank-interest-rates-putin-2024-11">64% this year</a>, as of November 5th.Russian prices may seem largely indifferent to tight monetary policy, but the country's business leaders are not. Sergei Chemezov, the CEO of the country's defense conglomerate Rostec, warned that record interest rates were costing businesses profitability, and would <a target="_blank" href="https://www.businessinsider.com/russias-defense-sector-on-overdrive-but-firms-warn-of-collapse-2024-11">trigger nationwide bankruptcies</a>."The current high level of the key interest rate and the indicated prospects for further increases have created a risk of economic downturn and a collapse in investments in the near future," TsMAKP said.With the central bank now operating in the shadow of stagflation, the worst may still be ahead. Data released on Wednesday showed that Russia's economy slumped 3.1% year-over-year in the last quarter."We think that year-on-year GDP growth will probably slow further over the coming quarters as war-related constraints on the economy continue to act as a limit on activity, and monetary tightening weighs more heavily on domestic demand," Capital Economics wrote on Wednesday But with inflation likely to remain elevated, the central bank will probably tighten monetary policy further."The research firm expects Russia's central bank to hike the key interest rate to 22% next month.

Russia's economy is heading toward a fate worse than recession, pro-Kremlin economists say

<ul class="summary-list"><li>Russia's war economy ins't in imminent danger of collapse, economist Vladislav Inozemstev said.</li><li>That's because Russia has adapted to the war and looks more stable than it did a few years ago.</li></ul>Russia may stand a better chance at sustaining its war economy than previously thought.That's according to Vladislav Inozemstev, an exiled Russian economist who thinks the chances of an economic collapse in the country have dwindled despite the chorus of experts who predicted a <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-crisis-ukraine-war-moscow-inflation-sanctions-putin-spending-2024-10">grim</a> <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-ukraine-war-moscow-putin-inflation-labor-shortage-rates-2024-5">economic</a> <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-population-decline-worker-shortage-growth-outlook-ukraine-war-2024-8">future</a>.Inozemstev, who has been critical of Putin's regime and left Russia after being labeled as a "<a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-ukraine-war-moscow-business-national-security-treason-spying-2024-10">foreign agent</a>" in 2023, said the nation's trajectory looked similar to the Axis Powers in the 1930s, when the group of nations rose to prominence partly due to their "highly effective market economies," he wrote in a recent <a target="_blank" href="https://www.memri.org/reports/russias-economic-prospects-2025-and-beyond">op-ed</a> published by the Middle East Media Research Institute. The comparison suggests that Russia will be able to sustain its war-driven economy for longer than many expected, he said, dismissing the notion that Russia was headed for a <a target="_blank" class="" href="https://www.businessinsider.com/russia-ukraine-war-economy-soviet-union-spending-workers-flee-imf-2024-2">Soviet Union-style</a> collapse."The war, formally an 'emergency,' has been rethought as a 'new normal' that can be waged indefinitely. Even though many experts are still talking about the aggravating slowdown in Russia, the Kremlin is mostly right: These days, the economy is the Russian dictator's reliable rear," Inozemstev said. "To conclude, I would argue that Russia seems to have become a long-term threat to the Western world whose chance of economic collapse is extremely small," he later added.Russia's finances appear to have stabilized since the early days of the war, when even the Kremlin <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-collapse-putin-moscow-gdp-outlook-ukraine-war-sanctions-2023-11">admitted the economy was on the verge of collapse</a>.Federal revenue has exceeded expectations for the past several years, Inozemstev noted, rising 28% on an annual basis from the months of January and October, according to <a target="_blank" class="" href="https://interfax.com/newsroom/top-stories/107508/">Interfax</a>. Russia also posted a <a target="_blank" class="" href="https://www.reuters.com/markets/europe/russia-records-budget-surplus-01-gdp-jan-sept-2024-2024-10-09/#:~:text=MOSCOW%2C%20Oct%209%20(Reuters),Finance%20Ministry%20said%20on%20Wednesday.">small budget surplus</a> through the first nine months of the year and is estimating only a small budget deficit of 0.5% of GDP in 2025, according to data from Russia's finance ministry.Russia's economy has <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-outlook-defense-budget-spending-ukraine-war-putin-sanctions-2024-10">held up</a> partly due to its <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-ukraine-war-moscow-military-spending-inflation-worker-shortage-2024-2">hefty war spending</a>, experts have said, which has boosted growth despite soaring <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-outlook-stagflation-recession-inflation-gdp-growth-ukraine-war-2024-9">inflation</a>, <a target="_blank" class="" href="https://www.businessinsider.com/russian-central-bank-raises-key-interest-rate-to-21-2024-10">high interest rates</a>, and a labor market <a target="_blank" class="" href="https://www.businessinsider.com/russian-economy-brain-drain-labor-shortage-workforce-exodus-capital-flight-2023-9">short of millions of workers</a>.Russia has also taken measures to boost business activity, Inozemstev said, such as by not hiking taxes for entrepreneurs and self-employed workers, while implementing subsidized loan programs for businesses. That means many businesses are sheltered from the pain of higher borrowing costs — and they could actually benefit from the surge in inflation in Russia, which could raise profits, he added.Bank deposits from Russian citizens and corporations, meanwhile, have swelled 54% since 2022, according to central bank data. Russia's war economy also looks to have gained the acceptance of the Russian people, who are benefiting from <a target="_blank" class="" href="https://www.businessinsider.com/russia-war-economy-boosts-wages-salaries-beat-inflation-labor-crunch-2024-2">higher wages</a> amid the nation's severe worker shortage. It's another key factor that makes Russia's economy likey more stable than many have thought, Inozemstev said."The economy, I would argue, is now undergoing another wave of adaptation to the changing conditions," Inozemstev wrote. "The people realize that the 'war economy' has substituted the anemic economic condition of the 2010s."Inozemstev said he expected Russia's economy to continue to grow in 2025 and beyond, forecasting 2%-2.5% GDP growth next year. The <a target="_blank" class="" href="https://www.imf.org/en/Countries/RUS">International Monetary Fund</a> has said it is expecting Russia's economy to expand by 3.6% in 2024.

The odds of Russia's economy collapsing are 'extremely small' and the war can go on for the long term, economist says

<ul class="summary-list"><li>Saudi Arabia could flood the market with oil to regain control of prices.</li><li>This would create a difficult situation for Russia, which is reliant on higher crude prices. </li></ul>Russia's wartime economy could face a tougher time securing needed oil revenue if Saudi Arabia tanks global crude prices.The kingdom has reportedly signaled that crude <a target="_blank" href="https://markets.businessinsider.com/news/commodities/saudi-arabia-opec-oil-production-cuts-crude-prices-middle-east-2024-10">could drop as low as $50 a barrel</a> if the Organization of Petroleum Exporting Countries does not commit to reducing oil output.In other words, Riyadh is hinting that it could flood the market with oil supply, analysts say. The move would slash prices and penalize OPEC members who have not cooperated in reducing oil flows — including Russia."With Russia already selling its oil at discounted rates and with higher production costs, a low-price environment in oil markets may impact its ability to finance its aggression in Ukraine," Luke Cooper, a research fellow at the London School of Economics, <a target="_blank" href="https://www.ips-journal.eu/topics/foreign-and-security-policy/will-oil-decide-the-fate-of-the-russia-ukraine-war-7836/">wrote for the IPS Journal</a>.Saudi Arabia, the de facto leader of OPEC, has been trying to keep oil above $100 per barrel by pushing for member states to cut production.But with <a target="_blank" href="https://markets.businessinsider.com/commodities/oil-price?utm_medium=ingest&amp;utm_source=markets">international crude</a> hovering below the $80 mark, this hasn't worked. To shift strategy sources told the Financial Times that <a target="_blank" href="https://markets.businessinsider.com/news/commodities/saudi-arabia-oil-prices-brent-crude-outlook-opec-production-cuts-2024-9">Riyadh now plans to turn on its taps</a> by December."Saudi Arabia is fed up," Simon Henderson, director of the Bernstein Program on Gulf and Energy Policy at The Washington Institute, told Business Insider. "Leadership of OPEC is a multifaceted responsibility. It can work well, but it's also like herding cats — pretty damn impossible, at least some of the time."<a target="_blank" href="https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/oil/080824-opec-produces-437000-bd-above-quota-in-first-month-of-compensation-cuts">S&amp;P Global Ratings</a> data counts Russia among the overproducers in OPEC+. According to its last available data, Moscow produced 122,000 barrels above its daily quota in July. Iran and Kazakhstan also breached agreed-upon thresholds.<h3 id="60a31c17-d810-4adf-87a8-d604514ebe43">The Kremlin's dilemma</h3>Henderson suggested that some coalition members might be doing this to maximize profits.In Russia's case, Moscow is facing pressure to rake in as much as it can, as its war in Ukraine has ballooned defense and security spending in three years of war. These sectors will collectively account for <a target="_blank" href="https://www.businessinsider.com/russia-economy-outlook-defense-budget-spending-ukraine-war-putin-sanctions-2024-10">40% of all federal expenditures in Russia next year</a>.Russia's finances, meanwhile, are heavily dependent on oil revenue. A few years ago, gas and oil production made up <a target="_blank" href="https://www.reuters.com/business/energy/russia-reducing-share-budget-revenue-gas-oil-minister-says-2024-10-10/">35%-40% of the nation's budget revenue</a>, the country's finance minister said this week.It's for this reason that the West has been so focused on curbing Russian oil profits. Consider the Group of Seven's $60 price cap on Moscow's crude: though the two-year initiative has <a target="_blank" href="https://www.dallasfed.org/research/economics/2024/0514">not panned out as hoped</a>, it was considered to be a key to keeping oil supply stable while denying the Kremlin much needed revenue.Russia has been able to circumvent these caps <a target="_blank" href="https://markets.businessinsider.com/news/commodities/russia-sanctions-oil-trade-shadow-fleet-tankers-ukraine-war-economy-2024-8">using unregistered "shadow" tankers</a>, but Riyadh's $50 per barrel threat might be harder to overcome.Things could turn sour if Saudia Arabia's supply dump reignites an oil price war between Russia and the kingdom. Henderson <a target="_blank" href="https://www.washingtoninstitute.org/policy-analysis/saudi-arabia-signals-oil-policy-shift">suggested this could happen</a>, referring to a similar event that occurred in 2020.That year, production cut disagreements prompted both nations to unleash supply, testing who could survive this low-price environment longer.In these situations, foreign exchange reserves become essential, which is problematic for Russia. Since invading Ukraine, the country's insurance against low oil prices has dissipated. Russia's National Wealth fund was nearly <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-bleeding-money-liquid-reserves-national-wealth-fund-war-2024-1">halved at the start of this year,</a> and it is no longer able to source Western currencies to diversify its foreign exchange reserves.It remains to be seen whether President Vladimir Putin will want to engage in a price war with Riyadh, given his other, more immediate priorities, Henderson said.Predicting the Kremlin's moves is hard, he said, given many unknowns tied to Russia's oil sales.However, some kind of confrontation with Saudi Arabia may be stirring. This week, Russia's deputy prime minister Alexander Novak said it's <a target="_blank" href="https://www.reuters.com/business/energy/russia-says-too-early-say-if-market-ready-extra-oil-dec-2024-10-09/">unclear whether OPEC should increase oil output at its December meeting</a>, as signaled by Saudi Arabia.If things do take a turn for the worst, Cooper sees a potential price war as bad news for Russia. "Unlike Saudi Arabia, its oil is not cheap to extract, making it poorly equipped to deal with low-price conditions. This drives a short-term escalatory logic for Russia's war on Ukraine, requiring rapid battlefield successes prior to the emergence of low-price oil market conditions."

How Saudi Arabia could create a crisis for Russia's economy

<ul class="summary-list"><li>Donald Trump proposed mass deportation to lower housing costs and boost job opportunities.</li><li>Democrats argue deportations harm businesses, separate families, and displace millions.</li></ul>The <a target="_blank" class="" href="https://www.businessinsider.com/trump-deportation-immigration-policy-election-housing-home-prices-construction-costs-2024-10">mass deportation</a> of people living in the US illegally has been one of the cornerstones of the Republican presidential ticket leading up to the November election.In speeches, former president <a target="_blank" class="" href="https://www.businessinsider.com/housing-affordability-supply-impact-presidential-election-scenarios-homebuyers-harris-trump-2024-10">Donald Trump</a> has suggested that deportations could lower housing prices and give legal residents, especially Black and Hispanic Americans, more job opportunities. His supporters say allowing migrants to enter the country and live and work illegally places a long-term burden on the economy."We're going to have the largest deportation in the history of our country," Trump <a target="_blank" href="https://abcnews.go.com/Politics/trump-vows-mass-deportation-migrants-springfield-dismisses-threats/story?id=113661663">said in September</a> while taking reporter questions in Los Angeles. "And we're going to start with <a target="_blank" href="https://www.businessinsider.com/springfield-ohio-town-center-baseless-trump-pet-eating-claims-tensions-2024-9">Springfield</a> and <a target="_blank" href="https://www.denverpost.com/2024/09/13/aurora-tren-de-aragua-donald-trump-venezuela-immigration/">Aurora</a>," he added, referring to the Ohio and Colorado cities where debates around immigration have been particularly tense.Many Democrats say <a target="_blank" class="" href="https://www.businessinsider.com/trump-mass-deportation-immigraiton-plan-federal-reserve-inflation-2024-9">mass deportations</a> would hurt businesses and employment opportunities for all Americans, in addition to separating families and displacing millions of people. It's especially salient in the crucial southern border swing state of Arizona."We all remember what they did to tear families apart, and now they have pledged to carry out the largest deportation — a mass deportation — in American history," Vice President Kamala Harris said at a <a target="_blank" href="https://www.youtube.com/watch?v=AFCjE-73yUw">September conference</a>. "Imagine what that would look like and what that would be. How is that going to happen? Massive raids? Massive detention camps?"Current <a target="_blank" class="" href="https://www.businessinsider.com/texas-latinos-shifting-right-trump-harris-gop-democrats-starr-county-2024-10">immigration</a> policy already supports deporting large numbers of unauthorized residents. The Biden administration has deported over <a target="_blank" href="https://www.migrationpolicy.org/article/biden-deportation-record">1.1 million</a> people from 2021 to February 2024, and Vice President Kamala Harris has supported <a target="_blank" href="https://www.piie.com/blogs/realtime-economics/2024/trump-vs-harris-immigration-future-policy-proposals">higher standards</a> for asylum eligibility.Deportations would likely continue under Harris' administration, but Trump's proposals would be an order of magnitude greater and perhaps the most consequential outcome of his second term.A September <a target="_blank" href="https://www.pewresearch.org/politics/2024/09/09/issues-and-the-2024-election/">Pew Research Center poll</a> found that immigration is a key issue for more than half of Americans as they cast their ballots. To untangle the data and campaign rhetoric and understand the effects of mass deportation on the economy, Business Insider reviewed research and spoke with over a dozen experts, politicians, local advocacy organizations, and immigrants.<h2 id="460770c2-debc-4bb0-921f-c9c4040c1f7b">2 cities in Arizona show the crux of the economic debate</h2>Immigrants, both authorized and unauthorized, make up nearly 13% of Arizona's population, one of the highest in the country, the nonpartisan think tank <a target="_blank" href="https://www.migrationpolicy.org/data/state-profiles/state/demographics/AZ">Migration Policy Institute</a> estimates. Pew Research Center estimates <a target="_blank" class="" href="https://www.kjzz.org/kjzz-news/2024-07-30/report-undocumented-migrants-make-up-3-5-of-arizonas-population">as many as 250,000</a> Arizona residents could be deported under Trump's plan.Some of those deportees could be from Yuma, Arizona, a city near the <a target="_blank" class="" href="https://www.businessinsider.com/kamala-harris-arizona-mexico-border-security-immigration-trump-election-2024-9">US-Mexico border</a>. Its mayor, Douglas Nicholls, told BI that upticks in illegal immigration have strained the city's resources and infrastructure.Nicholls, a Republican, plans to vote for Trump and wants the next president to focus on more funding and staffing for the Immigration and Customs Enforcement agency. He said the US needs to prioritize immediate processing for those seeking asylum, improve technology along the border, and expedite removal processes."We're not equipped as a community to handle large amounts of people coming through without resources," Nicholls said. "We don't have a homeless shelter focused on migrants. Our homeless shelter is focused on pretty much residents, and it's pretty busy at that already."When it comes to mass deportations, he said the town's main industry, agriculture, wouldn't suffer too much because employers use legal paths to work authorization, like H-2A or green-card programs, to recruit labor. He said that migrants tend to pass through Yuma before moving on.Tucson's mayor, Regina Romero, said the story is different in Arizona's second-most populous city. She told BI that a mass deportation would devastate the agriculture, construction, and hospitality industries.Romero, a Democrat who endorsed Vice President Kamala Harris, said immigrants living in the country illegally "pay <a target="_blank" class="" href="https://www.businessinsider.com/rich-life-insurance-estate-taxes-ilit-2024-9">taxes</a> and have billions of dollars worth of spending power."Instead of deportation, Romero said she wants the federal government to add more judges and staff to shorten asylum-application wait times and invest more in infrastructure at ports of entry."For many decades, Tucson has known how to help immigrant refugee and asylum-seeking populations connect to whomever they need to connect to," Romero said. "We know how to do it."<h2 id="797f992d-38a7-4c54-a0ef-9b344070016b">The national economic impact of mass deportations</h2>Removing the <a target="_blank" href="https://cmsny.org/us-undocumented-population-increased-in-july-2023-warren-090624/#:~:text=The%20total%20undocumented%20population%20increased,to%2010%20million%20in%202020.">estimated</a> 11.7 million unauthorized immigrants from the US would reshape the labor market, cost an enormous amount, strain government services, and affect economic growth and inflation for a decade or more.<h3 id="91aa708f-8270-476a-97e4-7e553eda3734">Employment and the labor market</h3>The Trump campaign and its allies have argued that deportations could open more employment opportunities for Americans.Immigrants are "going to be attacking — and they already are — Black population jobs, the Hispanic population jobs, and they're attacking union jobs, too," Trump said at an October rally in Reading, Pennsylvania.Immigrants account for a third of workers in jobs paying under $30,000 a year, the conservative think tank American Compass <a target="_blank" href="https://americancompass.org/a-guide-to-labor-supply/">said</a>. Duncan Braid, its coalition director, told BI that competition from those immigrants hurts lower-income Americans. He said while mass deportations may cost the government a lot of money, its role is to protect the Constitution and its citizens."We currently have a situation where there is sort of an unlimited number of lower-skilled people coming into this country, and them competing directly with other low-skilled Americans already here would necessarily, just based on very basic theory, suppress their wages," Braid said.Recent research suggests the opposite. A <a target="_blank" href="https://www.nber.org/papers/w32389">working paper by economists</a> at the University of California, Davis, found that increases in immigration can boost native employment."We really don't see much evidence of substitution between unauthorized immigrants and US-born people at all," <a target="_blank" href="https://www.brookings.edu/people/chloe-east/">Chloe East</a>, a fellow at the Brookings Institution, said. "That's partly because the jobs that unauthorized immigrants are willing to take are lower-paying, are more dangerous, and are less desirable for other reasons."<h3 id="dd881018-1654-4a0f-89bc-4814c3eb733e">How much a mass deportation would cost the government</h3>The Trump campaign has talked little about how mass deportations could be implemented and on what scale. While in the White House, Trump carried out about <a target="_blank" class="" href="https://www.migrationpolicy.org/article/biden-deportation-record">1.5 million</a> deportations and made similar promises about mass deportation but was met with various legal challenges. At a campaign rally on October 11 in Aurora, Colorado, Trump pledged to use a 1798 law to deport suspected members of cartels and gangs.To carry out what he called "the largest domestic deportation operation in American history," Trump plans to bolster ICE raids by reassigning federal agents and recruiting from local police forces and says he'll order the construction of new detention camps for people waiting for their cases to be processed, <a target="_blank" href="https://www.nytimes.com/2023/11/11/us/politics/trump-2025-immigration-agenda.html">The New York Times reported</a>.That would be an expensive undertaking. Using Census Bureau data, the <a target="_blank" href="https://www.americanimmigrationcouncil.org/research/mass-deportation">American Immigration Council</a> estimated it would cost the federal government over $315 billion, including hiring up to 409,000 new government employees.In addition to labor market disruptions, economists also say the country would lose tax revenue. Unauthorized immigrants paid $96.7 billion in federal, state, and local taxes — about $8,889 per person — in 2022, the <a target="_blank" href="https://itep.org/undocumented-immigrants-taxes-2024/">Institute on Taxation and Economic Policy</a> said. In 2022, unauthorized immigrants paid about $704 million in state and local taxes in Arizona alone.Supporters of deportation argue that the loss of tax revenue would be offset by savings on reduced services for immigrants. A study from the conservative <a target="_blank" href="https://manhattan.institute/article/the-lifetime-fiscal-impact-of-immigrants">Manhattan Institute</a> estimated that while older and less-educated immigrants, on average, receive more in federal benefits than they pay in taxes, higher-educated young immigrants are taxed more than they get back over their lifetime.The Trump campaign has made a similar argument, saying that welfare programs, taxpayer-subsidized health insurance, transportation costs through FEMA, and education expenses for immigrants ultimately cost taxpayers billions of dollars."The real economic crisis is the $182 billion American tax dollars spent each year to cover the costs of 20 million illegal immigrants that have flooded our communities thanks to Kamala Harris' wide-open border policies," Taylor Rogers, an RNC spokesperson, said in a statement to Business Insider."President Trump's mass deportation of illegal immigrants will not only make our communities safer but will save Americans from footing the bill for years to come," Rogers added.<h3 id="636206ff-627e-4eb3-9f7e-3ba104a3e936">Economic growth and inflation</h3>Mass deportations could have consequences for economic growth as a whole. The Trump campaign hasn't addressed overall growth and inflation concerns but has said deportations would help reduce demand in the housing market.On a more macro scale, the <a target="_blank" href="https://www.piie.com/blogs/realtime-economics/2024/mass-deportations-would-harm-us-economy">Peterson Institute</a> for International Economics said gross domestic product could fall 1.2% below baseline by 2028 if 1.3 million people are deported, while inflation could climb 0.5 percentage points above current estimates by 2026. In a more extreme scenario where 8.4 million people are deported, GDP could fall by 7.4% and inflation could climb 3.5 percentage points above baseline by the end of the decade.The American Immigration Council has a similarly negative view of the economic impact. It estimated that the US could lose between 4.2% and 6.8% in GDP if about 11 million people are deported."It would be very easy for an average American to see the impact of this policy in their daily life," Marcus Noland, the executive vice president and director of studies at the Peterson Institute, said.

Arizona is the epicenter of the debate over how Trump's mass deportation plan would hit the economy

<ul class="summary-list"><li>Fresh signs of deflation in China are stoking demand for national stimulus to revive the economy.</li><li>Consumer prices rose by 0.4% in September, while producer prices fell by 2.8%.</li></ul>Chinese officials are under mounting pressure to stimulate the economy after official price data released Sunday stoked fresh deflation fears.The consumer price index (CPI) rose 0.4% year-on-year in September, as bad weather pushed up food prices ahead of the Golden Week holiday. That was below the consensus estimate of 0.6%, which would have matched the rate of price growth in August.The producer price index (PPI) fell 2.8% compared to September last year — the sharpest drop in six months and up from 1.8% in August.Prices have stagnated due to a slew of economic headwinds that are weighing on domestic demand:<ul><li>Slowing economic growth threatens to stall wage growth and spark layoffs, when youth unemployment is already at a historic high and a regulatory crackdown on Big Tech has narrowed an attractive career avenue.</li><li>Exporters are worried about countries like the US imposing even higher tariffs on their goods and cutting off manufacturers' access to critical technologies such as advanced microchips.</li><li>People are concerned about their home values as China's massive property bubble has burst, sending shockwaves through the economy that have squeezed local government budgets and affected industries such as construction.</li></ul>Even with those drags, Goldman Sachs has raised its GDP growth forecast for China from 4.7% to 4.9% this year — just shy of the government's 5% target — and from 4.3% to 4.7% next year, Bloomberg reported. The investment bank's analysts cited the government's planned stimulus package, which has somewhat revitalized Chinese stock markets despite officials offering limited details.China's leader, Xi Jinping, may be wary of overstimulating the economy as aggressive government support was a key contributor to the property bubble."China didn't pull out the fiscal bazooka" at a press conference on Saturday, Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, said in a morning note."Xi doesn't like market euphoria and investors don't like the fact that the ample monetary stimulus may not be channeled toward the right places in the absence of an efficient and comprehensive fiscal package. But both agree that China needs stimulus to overcome the deepening property crisis and fight deflation."

Prices in China are stagnating, putting more pressure on Beijing to jump-start the economy

<ul class="summary-list"><li>Russian inflation is rising while the nation's economy cools, the country's central bank said.</li><li>These are the key ingredients for stagflation, a scenario that's harder to combat than a recession.</li></ul>As Russia's GDP and inflation figures move in the wrong direction, the worst-case scenario for any economy looms large over Moscow."There are signs of cooling domestic demand. However, there is no reduction in inflationary pressure," Russia's central bank cited in a <a target="_blank" href="https://www.cbr.ru/press/event/?id=21031">summary</a> of its latest policy meeting, translated by <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-09-25/russia-flags-slowing-economic-demand-as-price-pressures-persist">Bloomberg</a>.The unfortunate pairing, more often known as stagflation, is something policymakers prefer to avoid at all costs.It's a scenario harder to thwart than a recession: when an economy slows down, central banks will loosen interest rates to revive activity. But if inflation keeps rising at the same time as a downturn, things quickly become complicated. Since interest rates must stay high to cool price growth, governments are left paralyzed.Though the Bank of Russia did not specifically refer to stagflation, the conditions it described make it a sincere concern.In a <a target="_blank" href="https://www.businessinsider.com/russia-economy-growth-recession-labor-worker-shortage-inflation-sanctions-west-2024-9">separate report this month</a>, the bank projected that GDP was destined to sharply slowdown next year. Though Russia's economy has prospered under its wartime boom, sanctions, production output limitations, and a severe labor crunch are bound to wear it down by 2025.According to the policy summary, OPEC+ oil production cuts are also <a target="_blank" href="https://markets.businessinsider.com/news/commodities/russia-economy-oil-war-revenue-crude-prices-opec-production-cut-2024-9">denting Russian growth</a>.Against this backdrop, inflation is still on a tear in Russia. The central bank elected to hike interest rates to <a target="_blank" href="https://abcnews.go.com/International/wireStory/russian-central-bank-hikes-rates-fight-inflation-fueled-113655605">19% this month</a>, as prior efforts have not slowed it down.To blame is Moscow's aggressive defense spending, projected to remain at historic highs through 2025. According to the country's latest draft budget, the spending will tick slightly lower in the two years that follow.Also at fault are labor shortages — as the Ukrainian front required Russians, businesses have had to push up wages to attract new workers. By last year's end, the country was estimated to lack nearly<a target="_blank" href="https://www.businessinsider.com/russia-lacks-workers-ukraine-war-labor-crisis-worker-shortage-2023-12"> 5 million workers.</a>There is one caveat to the stagflation fear: if domestic demand continues cooling, the central bank expects inflation to fall alongside it.Nonetheless, current conditions do not bode well for Russia. When stagflation last hit the US in the 1970s, the US Federal Reserve was forced to initiate a <a target="_blank" href="https://www.businessinsider.com/stagflation-recession-us-economy-outlook-gdp-dimon-inflation-rate-cuts-2024-4">deep recession</a> to finally end the turmoil.

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