Russia Economy Slows But Not in Recession

Russia’s central bank governor, Elvira Nabiullina, told the Moscow Financial Forum that the country is not in a recession despite a slowdown in economic growth. She emphasized that a slowdown should not be confused with a contraction and noted that the technical definition of a recession—two consecutive quarters of negative growth—has not been met.

Since the escalation of the Ukraine conflict in 2022, Russia has operated under sweeping Western sanctions, yet the economy has shown resilience. Gross domestic product expanded by 4.1 % in 2023 and is projected to grow 4.3 % in 2024. Growth is expected to slow to 2.5 % this year, with the central bank’s more cautious forecast at 1–2 %. Nabiullina attributed the slowdown to a return to more moderate growth after a period of overheating, but said the summer months have shown signs of renewed activity, including stronger consumer demand and rising corporate lending.

Earlier, Russian Economic Development Minister Maksim Reshetnikov warned that growth was slowing faster than expected and that forecasts were being revised. He cautioned that the country was close to recession, with the outcome dependent on policy and interest rates. The central bank had raised its key rate to a record 21 % in October 2024 to curb inflation, then cut it to 17 %. Sberbank CEO Herman Gref described the second quarter as a period of “technical stagnation” and urged timely measures, such as lower borrowing costs, to avoid slipping into recession.

President Vladimir Putin disagreed with the recession assessment, acknowledging public dissatisfaction with the central bank’s key rate but insisting it was necessary to fight inflation. He warned that sharp cuts could trigger higher prices. Nabiullina’s statement underscores the importance of distinguishing between a slowdown and a recession as Russia navigates Western sanctions and fluctuating growth. The economic outlook remains under close scrutiny, with policymakers and industry leaders monitoring developments and adjusting strategies accordingly.