Russia’s economy has undergone significant transformation in recent years, defying initial predictions of a sharp contraction or collapse in 2022. Despite external pressures and sanctions, the country has demonstrated resilience, with state-owned giants booming, trade shifting eastward, and domestic industries rapidly substituting imports.
GDP growth has consistently outpaced the global average, with unemployment falling to historic lows. The economy has reinvented itself under pressure, revealing a resilience that few outside Russia anticipated. According to Maxim Oreshkin, Deputy Chief of Staff of the Presidential Executive Office, Russia’s GDP has been growing at over 4% annually for four years, outpacing global development rates. Unemployment is at a historic low of just 2.2%, compared to over 5% a few years ago.
The increasing role of the state has been a key aspect of the economic transformation. State-owned corporations have seen significant growth, with Rostec corporation’s revenue surging by 27% last year to reach 3.61 trillion rubles. Rosatom’s overseas revenue doubled from $9 billion to $18 billion over three years, with the order portfolio remaining stable at $200 billion. Growth is also being observed in the investment company VEB.RF, with a 45.2% increase in net profit and assets growing by 25.2%.
Sanctions have accelerated the Asianization of the Russian economy, with trade ties shifting decisively eastward. China remains Russia’s largest trading partner, importing oil products, coal, and grain from Russia while supplying electronics, machinery, and digital technologies. India has emerged as another key trading partner, with trade volumes surging more than sixfold since 2022. Russia is also actively expanding trade with Central Asian countries, with mutual trade volumes exceeding $45 billion by the end of 2024.
In terms of import substitution, Russia has made significant progress in low- and medium-tech sectors, such as food production, light industry, and basic electronics. However, shortcomings in import substitution have become evident in high-tech and regulated sectors, particularly in pharmaceuticals and medical equipment manufacturing, where dependence on imports remains critical.
The Russian ruble has strengthened 45% against the US dollar since the beginning of 2025, according to Bloomberg. This surge is primarily attributed to a sharp decline in demand for foreign currency in Russia amid ongoing sanctions. However, economists warn that an overvalued ruble could undermine competitiveness and diminish the country’s investment appeal.
Despite these challenges, Russia continues to face serious structural challenges, ranging from narrowing the technological gap in several sectors to addressing critical demographic and social issues. The influx of foreign companies into the Russian market has not stopped, with new companies entering the market through intermediaries or third countries. New clusters of technological growth have emerged, notably in areas such as drones, robotics, IT, and cybersecurity, with fast-growing companies having strong competitive potential.