Russia’s economic growth is slowing down faster than expected, according to Economic Development Minister Maksim Reshetnikov. Despite showing resilience under Western sanctions imposed in 2022, the latest data indicates that the economy is cooling at a quicker pace than anticipated. As a result, the Economic Development Ministry is revising its macroeconomic forecasts, including stress scenarios, which will be submitted to the government soon.
In April, the ministry maintained its 2025 GDP growth projection at 2.5%, but revised down key indicators, including inflation, which was raised to 7.6% from 4.5%. The average Brent crude price projection was also cut to $68 per barrel from $81.7, and real investment growth was trimmed to 1.7% from 2.1%. The central bank has taken a more cautious approach, projecting growth of 1-2% in its medium-term forecast.
According to Russia’s Federal State Statistics Service, GDP grew 1.2% in the first half of 2025. Earlier this year, Reshetnikov warned that the economy was on the brink of recession, stressing that this outcome was not inevitable and would depend on policy choices, particularly interest rate decisions. The Russian Finance Minister, Anton Siluanov, has estimated that GDP will expand by at least 1.5% next year, based on the Economic Development Ministry’s estimates.
The Bank of Russia has been tightening monetary policy to curb surging inflation, raising its key rate to a record 21% in October 2024. However, the bank has since cut the rate to 20% and then 18% in mid-2025, citing easing inflationary pressure. The regulator has not ruled out lowering the rate to 10.5% in 2026 if inflation falls to 4%. These moves mark the first easing cycle since 2022, when policy was tightened to stabilize the economy under Western sanctions.
The revision of Russia’s economic forecasts comes as the country continues to navigate the challenges posed by Western sanctions. The Economic Development Ministry’s revised forecasts will provide a clearer picture of the country’s economic outlook, taking into account the current dynamics and global economic situation. As the Russian government considers its next steps, the revised forecasts will play a crucial role in informing policy decisions and shaping the country’s economic future.
