• Putin told Russia the nation would be fine in his New Year's address.
• He refrained from giving a concrete outlook for the Ukraine war or Russia's economy.
• The nation is facing growing costs from its invasion, from rising casualties to soaring inflation.

Vladimir Putin assured Russia he was "certain that everything will be fine" in his New Year's Eve address on Tuesday, as the nation heads toward its fourth year of war in Ukraine in 2025.

In his speech, the Russian president said the nation was overcoming various challenges and would continue to move on. He also referred to 2025 as the "year of the Defender of the Motherland," and gave respect to Russia's "fighters and commanders," The New York Times reported.

Still, Putin refrained from giving a concrete outlook on the war in Ukraine, or the path of the Russian economy going forward. He also did not mention Russia's inflation struggles, one of the nation's key economic problems.

The comments come amid swirling military and economic uncertainty in Russia, which is under increasing strain as its war against Ukraine is set to turn three years old in February.

A report from the Institute for the Study of War said that Russia suffered about 427,000 casualties in 2024 while gaining about 1,600 square miles of territory. Russia's military slowed its advances last month, with forces gaining around seven square miles of land a day in December.

On the economic front, the costs of Russia's invasion continue to mount. The nation has earmarked 13.5 trillion rubles for its defense spending next year, amounting to around a third of Russia's total federal budget.

Private business activity has also been hindered by the flight of capital and younger workers who fled the nation at the start of the war. An analysis from S&P Global showed that private equity or venture capital-backed deals and investments plunged 39% from 2022 to 2023.

Inflation, meanwhile, remains well above the central bank's 4% target, while interest rates have risen to 21%.

Putin has generally brushed off concerns about the Russian economy, but acknowledged the nation's struggle with inflation in a recent address. In December, he acknowledged that Russia's inflation rate was "alarming" and the economy was "overheating."

At the end of 2023, Putin apologized for the soaring price of eggs, adding the rapid price increase was a "failure of the government's work."

Economists expect 2025 to be another difficult year for the country, and some predict that its economy could be headed for a period of stagnation similar to the Soviet Union in the early 1980s.

TsMAKP, a think-tank tied to the Russian government, said the nation was at risk at stagflation, a dire economic scenario that typically involves spiraling inflation, sluggish growth, and rising unemployment.

• Russian President Vladimir Putin said the ruble's plunge to two-year lows was no cause for panic.
• The Russian currency hit its lowest level against the dollar since March 2022 this week.
• Analysts say Russia is under pressure from inflation, military spending, and falling oil prices.

Russians shouldn't stress about the ruble tumbling to two-year lows, Vladimir Putin said Thursday. Analysts told Business Insider there was plenty of cause for concern.

The Russian leader told reporters that the "situation is under control" and that "there are absolutely no grounds for panic," according to a Google translation of a report from the RIA Novosti news agency.

Putin attributed the ruble's fluctuations "not only to inflation but also to budget payments and oil prices," along with many seasonal factors.

The Russian currency traded at 114 to the dollar on Wednesday, its weakest level since March 2022, shortly after the Ukraine invasion began. It was about 84 in early August, meaning the currency has depreciated by 36% in under four months. A greenback was worth about 108 rubles on Friday.

Russia's central bank stepped in to shore up the floundering ruble on Wednesday. It suspended purchases of foreign currency on the domestic market for the rest of this year to reduce volatility.

A Wednesday headline in the state newspaper Rossiyskaya Gazeta read, "Panic attack for Russia's currency market." The Kommersant newspaper warned readers to "buckle up your rubles."

The ruble's latest plunge follows the US sanctioning Gazprombank, one of Russia's largest lenders. The restrictions limit the bank's ability to access global financial markets and handle energy payments.

Russia also fired a hypersonic missile into Ukraine last week after its opponent launched missiles at targets inside Russia for the first time. The escalation has raised concerns of further economic disruption.

A weakening ruble benefits Russian exporters by making their goods more competitive in global markets. But it threatens to accelerate inflation by raising the cost of imports, leaving sellers little choice but to increase their prices. Stubborn inflation has already spurred Russia's central bank to raise the main interest rate to 21%, the highest level since 2003.

The Russian economy has suffered from Western sanctions imposed since Putin's invasion of Ukraine, with energy revenue tanking by almost a quarter last year. Other countries, such as India, have snapped up Russian oil instead, tempering the impact of price caps and other penalties.

Mounting pressure on Russia

Robin Brooks, a senior fellow focused on the global economy and development at the Brookings Institution, posted on X that the ruble's collapse shows how vulnerable Russia is to sanctions.

He also said the European Union's reluctance to impose certain penalties might have staved off economic disaster in Russia.

George Pavel at the trading platform Naga.com told BI the ruble's dive had been driven by rising inflation and a widening budget deficit fueled by heavy military spending.

"Russia's economic path looks unsustainable barring major changes," he said, ticking off concerns such as slowing growth, stubborn inflation, a tight labor market, and the massive cost of the Ukraine war.

Brent crude is trading at just over $70 a barrel, and sliding oil prices pose an existential threat to Russia, said Kathleen Brooks, research director at XTB.

"Russian income is shrinking at the same time as defense spending is surging as the war with Ukraine enters a more intense phase," Brooks said. "While President Trump may go some way to ending the Russia-Ukraine war, his policy on energy and plans to get the US pumping even more oil could weigh on the oil price further in 2025, which is bad news for Russia."