Russia’s economic growth is expected to slow sharply in 2025, with Finance Minister Anton Siluanov reportedly telling President Vladimir Putin on Wednesday that the economy will expand by only 1.5%, far below the earlier 2.5% forecast.
The slowdown follows robust wartime growth of 4.1% in 2023 and 4.3% in 2024, which outpaced most G7 countries despite multiple rounds of Western sanctions after the 2022 invasion of Ukraine.
Economy Minister Maxim Reshetnikov had warned in June that Russia risked slipping into recession unless monetary policy shifted.
High military spending has stoked inflation, prompting the central bank to raise its key interest rate to 21% in October 2024, the highest since 2003.
The rate was later cut to 20% in June and 18% in July, but borrowing costs and labour shortages continue to weigh on the economy.
Siluanov said: “If this year we see rather tough conditions for the implementation of monetary and credit policy, we see that the rate of economic growth will nevertheless be no less than 1.5 percent this year, at least according to the assessment of the Economy Ministry.”
He added that a balanced budget would give the central bank more flexibility to ease monetary policy, making credit more accessible. Analysts noted that high interest rates have curtailed investment by major companies, creating distortions in Russia’s wartime economy, a concern reportedly highlighted by Putin earlier this year.
