Putin to Confront Weak Economy at 'Russian Davos', under Threat of Ukrainian Drones

Russia's economy is in its trickiest spot since the start of the war in 2022. Ramil Sitdikov / POOL/AFP
Russia's economy is in its trickiest spot since the start of the war in 2022. Ramil Sitdikov / POOL/AFP
TT

Putin to Confront Weak Economy at 'Russian Davos', under Threat of Ukrainian Drones

Russia's economy is in its trickiest spot since the start of the war in 2022. Ramil Sitdikov / POOL/AFP
Russia's economy is in its trickiest spot since the start of the war in 2022. Ramil Sitdikov / POOL/AFP

Russia's Vladimir Putin will address a flagship investment forum in Saint Petersburg on Friday, as the war in Ukraine drags the economy into stagnation and days after brazen Ukrainian drone strikes rocked his home city.

Russia's offensive has led to rising prices, tax hikes, two-decade-high borrowing costs, business shutdowns and labour shortages, putting the economy in its trickiest spot since the start of the war in 2022.

Meanwhile, intensifying Ukrainian attacks on Russia's vital energy infrastructure -- oil depots, refineries, exporting hubs -- are threatening to dent Moscow's most important income stream.

In a highly symbolic strike, one attack hit a facility in Saint Petersburg as the conference opened on Wednesday, with arriving dignitaries greeted by a plume of back smoke in the background.

"The Russian economy is entering a stagnation, with high interest rates and high inflationary pressure," Alexander Kolyandr, a London-based Russian economy expert, told AFP on the eve of Putin's speech.

"I don't see the Russian economy entering the 1990s or something similar, it's just a slow degradation of everything," he added.

Russia's GDP contracted by 0.2 percent in the first three months of the year, according to official statistics -- the first quarterly slump in three years.

And the government posted an $80 billion budget deficit in the first four months of 2026 -- equivalent to 2.5 percent of annual GDP and more than was planned for the entire year.

- 'Russian Davos' -

The Saint Petersburg International Economic Forum (SPIEF) was once dubbed "Russia's Davos".

Western investors keen to make a buck in Russia's chaotic and fast-growing economy would gather to strike deals and hobnob with the Russian elite in the early years of Putin's rule.

But since the assault on Ukraine, it has become a marker of the ex-KGB spy's new place in the world.

Drones and machine guns are put on exhibition display.

Guests from China are now the top attendees. Americans and Europeans are few and far between.

Their slimmed-down ranks led by figures such as former Hollywood actor turned Putin-backer Steven Seagal, American conspiracy theorist Candace Owens, and MPs from the right-wing Alternative for Germany party.

Putin has previously used the event to insist the state can handle the billions being pumped into the military campaign, bash Western sanctions as a form of self-harm and insist that life at home will remain stable.

But in recent months, many Russians say life has become more expensive, as the economic costs of the war spread.

Asked by AFP about Russia's economic woes, the Russian leader on Thursday channeled Mark Twain.

"Rumors of my death have been greatly exaggerated," he said, rejecting the idea Russia was on the brink of a full-blown crisis.

- 'Shut down' -

Far away from where Putin will take to the stage on Friday, some small and medium businesses told AFP they were facing closure.

"Basically, we're planning to shut down," Svetlana, the owner of a maternity and kids brand in the Far East city of Khabarovsk, said.

"People are having less kids, tightening their belts, the costs are rising," the 40-year-old told AFP by phone.

Internet blackouts -- imposed by authorities as a means of thwarting Ukrainian retaliatory drone strikes -- mean her card payment terminal is often out of service.

"We are going back to life 18 years ago, when there was no internet or social media," she said.

"I'm tired of worrying about fines because of the new laws and the endless stream of new requirements that keep popping up," she said.

Vera, a 42-year-old owner of a beauty salon in the Moscow region, said her supplies have "doubled in price" this year.

But having survived "near collapse" in 2022, she is confident she can pull through.

"These difficulties are just unpleasantries," she told AFP.

- 'No good solution' -

The "slow degradation" of the economy would be irreversible unless the Kremlin made "political decisions" such as ending the war and restructuring the economy, expert Kolyandr said.

Russia has run a "two-tier" economy since the start of the war, prioritizing the state-dominated defense industry above everything else, he said.

While higher oil prices off the back of the Iran war have increased Russia's revenues, it has not been to the extent needed to refill the state budget, he added.

Labor shortages are also biting, with some 30,000 men a month being recruited for the war.

"There is no good solution," Kolyandr said.

"They will continue to kick the can for as long as possible."



IMF Says Engaging with Iraq on Preparing New Bailout Program

Central Bank of Iraq (INA)
Central Bank of Iraq (INA)
TT

IMF Says Engaging with Iraq on Preparing New Bailout Program

Central Bank of Iraq (INA)
Central Bank of Iraq (INA)

The International Monetary Fund on Thursday said it was engaging with Iraqi authorities as it prepares a new bailout program for the country, whose economy has been battered by the war on Iran.

The US-Israel war on Iran, launched in late February, plunged the region into conflict and saw Tehran's retaliatory action virtually block the Strait of Hormuz, a key energy supply route.

Iraq's economy is heavily dependent on its energy exports, which almost entirely rely on transport through the strait.

Before the war, the country was already facing acute fiscal constraints, and the IMF this month forecast its economy would contract by 16 percent this year.

"Our plan now is to engage with the authorities to understand better their priorities, how they want to address their vulnerabilities, and then to move ahead on how we can best support them with a program," said IMF spokesperson Julie Kozack at a regular press briefing in Washington.

Kozack cited the country's severe financing constraints from before the outbreak of the war, and said its very narrow non-oil revenue base was also putting pressure on the fiscal balance.

The last of Iraq's three most recent programs with the IMF ended in 2019.

It has a total of around $428 million in interest payments due to the Fund by 2030, according to IMF data.

IMF Chief Kristalina Georgieva first disclosed that Iraq had approached the Fund for a new program at the Fund's annual meetings in Bangkok earlier this month.

At those meetings, Georgieva lauded the resilience of global economic growth in the face of wars in Iran and Ukraine, but warned that outcomes were highly uneven with more vulnerable economies battered hard by the conflicts.


Iraq's Central Bank: Exchange Rate Gap Narrows to 9%, No New Currency Being Printed

Iraq's Central Bank Governor chairs a meeting on Thursday (Iraqi News Agency)
Iraq's Central Bank Governor chairs a meeting on Thursday (Iraqi News Agency)
TT

Iraq's Central Bank: Exchange Rate Gap Narrows to 9%, No New Currency Being Printed

Iraq's Central Bank Governor chairs a meeting on Thursday (Iraqi News Agency)
Iraq's Central Bank Governor chairs a meeting on Thursday (Iraqi News Agency)

Iraq's Central Bank Governor Nizar Nasser Hussein announced Thursday that the gap between the dinar's official exchange rate and its parallel-market rate had narrowed to 9%, down from approximately 24%, while denying reports that new banknotes were being printed.

Hussein made the remarks during a visit by the Iraqi Parliament's Investment and Development Committee to the central bank to discuss the repercussions of changes to the dollar exchange rate, their impact on economic and investment activity, and the challenges facing investors and local companies, according to a parliamentary statement carried by the Iraqi News Agency (INA).

The governor confirmed that no currency printing was underway, describing reports to the contrary as inaccurate. He also noted that the gap between the official and parallel-market exchange rates had fallen to 9%, as Iraq faces mounting financial and economic pressures stemming from the war involving Iran and disruptions to oil exports.

In early October, the Central Bank of Iraq raised the dollar's selling rate to the public to 1,520 dinars, from approximately 1,320 dinars previously, a move that devalued the dinar by around 15% against the dollar amid pressure on oil revenues and foreign currency inflows.

Iraq's public finances depend heavily on oil revenues, making export disruptions and declining foreign currency inflows major sources of pressure on the state budget and foreign exchange market.

During the meeting, the central bank outlined measures taken to support the economy, including assistance to state-owned and private banks in providing citizens with concessional loans ranging from 5 million to 15 million Iraqi dinars.

For its part, the Investment and Development Committee stressed the need to limit the impact of exchange rate changes on investment project costs, raw material prices and contractual obligations, as well as their repercussions for market stability and citizens' purchasing power.

The committee called for stronger coordination between the central bank, government agencies and the banking sector, streamlined bank financing procedures, and the removal of obstacles facing investors to ensure projects can continue without imposing additional burdens on businesses and citizens.

The developments come as Iraqi authorities seek to contain the economic fallout from the war amid mounting pressure on oil exports and public finances.

Iraq had requested financial support from the International Monetary Fund, which projected that the country's economy would contract by 16% this year, according to estimates cited in the report.


Riyadh Metro Opens New Horizons for Commercial Real Estate Investment

Men ride the Riyadh Metro heading to King Saud University Station in Riyadh (AFP)
Men ride the Riyadh Metro heading to King Saud University Station in Riyadh (AFP)
TT

Riyadh Metro Opens New Horizons for Commercial Real Estate Investment

Men ride the Riyadh Metro heading to King Saud University Station in Riyadh (AFP)
Men ride the Riyadh Metro heading to King Saud University Station in Riyadh (AFP)

Riyadh's public transport network is increasingly becoming a factor in real estate investors' calculations, with Saudi Arabia's rail services recording more than 40.9 million passengers during the third quarter of 2026. Of these, the Riyadh Metro accounted for 30.4 million riders.

This draws renewed attention to the attractiveness of commercial properties located near metro stations and the opportunities for cafés, restaurants, and retail outlets to benefit from passenger traffic. However, industry specialists note that assessing the metro's actual impact on rents and occupancy rates requires comparing property performance before and after operations began, while taking other market factors into account.

In this context, Khaled Al-Mobid, CEO of Menassat Realty Co., told Asharq Al-Awsat that the Riyadh Metro has begun to reshape the concept of a prime commercial location.

A desirable site is no longer limited to properties situated on major roads; ease of access through public transportation has become an additional factor enhancing investment appeal.

Al-Mobid added that average rents in Riyadh's major shopping centers reached approximately SAR 2,650 per square meter annually, reflecting growth of 1.2 percent, while occupancy rates remained stable at 91 percent during the first half of 2026. He stressed, however, that these indicators cannot be attributed solely to the metro.

He pointed to practical signs of the growing importance of transport-linked commercial activity, including the offering of 733 commercial units within the public transport network, in addition to opportunities available for cafés and financial services.

Metro Enhances the Appeal of Commercial Locations

Al-Mobid expects businesses that depend on daily customer traffic, particularly cafés, restaurants, and quick-service providers, to benefit from locations near the busiest stations. He believes proximity to metro stations will become a more important consideration for investors and developers when selecting sites and planning mixed-use projects.

He emphasized that the value of a commercial location in the future will not be measured solely by the number of cars passing by, but also by the number of people who can easily reach it without needing a vehicle.

A view of the Riyadh Metro's Blue Line emerging from the Financial District Station (SPA)

Measuring the Real Estate Impact Requires Market Comparison

For his part, Khalid Aljasir, a real estate specialist and chairman of Amaken International Group, told Asharq Al-Awsat that the launch of the Riyadh Metro represents a significant development in the city's infrastructure and is expected to gradually influence the real estate demand landscape, particularly in commercial areas that benefit from improved accessibility and higher user traffic.

Aljasir explained that proximity to public transport stations can enhance a property's investment appeal, although the extent of the impact varies depending on the location, the nature of the commercial activity, and the level of demand in the area.

He stressed that increases in rents or occupancy rates cannot be attributed solely to metro operations without analyzing other market variables.

He noted that measuring the metro's actual impact requires comparing similar commercial properties located near stations with those farther away, both before and after operations began. Metrics such as average rents, occupancy rates, and demand levels can help determine how improved accessibility affects real estate performance.

A view of the Riyadh Metro's Yello Line (SPA)

Accessibility Becomes a Key Consideration for Investors

Aljasir added that accessibility and integration with public transport networks are increasingly important factors when evaluating investment opportunities. Investors assess a property's ability to attract tenants and users, as well as how easily customers and employees can reach it, alongside traditional considerations such as location and size.

He noted that cafés, restaurants, retail stores, and daily-service businesses may benefit from sites experiencing steady pedestrian traffic near metro stations. Commercial offices may also gain from improved accessibility for employees and clients.

Furthermore, locations connected to public transport could become more attractive for mixed-use developments that combine commercial, office, and service functions.

Aljasir stressed that proximity to a station is not the sole determinant of investment success. Economic viability, rent levels, actual demand, the nature of the business, and overall site quality remain fundamental factors in decision-making.

He underscored the importance of studying the integration of public transportation and real estate development and evaluating its impact on expected cash flows and investment returns, rather than assuming that all properties near stations will experience the same increase in value or rental rates.