Russia GDP Growth Preview: 2025 GDP Growth Will Hit Around 1%
Bottom Line: After Russia's GDP expanded by a moderate 0.6% y/y in Q3, we expect Russian economy will grow by around 1.0% in 2025 as Q4 growth will likely hit 0.6%-0.7% y/y. The GDP growth figures are expected to be announced on February 6. We think Central Bank of Russia’s (CBR) previous aggressive monetary tightening coupled with sanctions, supply side constraints, relative RUB resilience and stubborn price pressures continue to remain restrictive. We envisage growth to hit 1.1% in 2026 as tightening cycle is still feeding through and easing effects will only come through fully into H2 2027/2028.
Figure 1: GDP Growth (%, Annual), Q3 2022– Q3 2025
Source: Ministry of Economic Development
After expanding by a moderate 0.6% in Q3 2025, marking the slowest rate of growth since Q1 2023, we expect Russian economy will grow by around 1.0% in 2025 as Q4 growth will likely hit 0.6%-0.7% y/y, signaling the economic slowdown is more evident despite strong military spending, higher wages and fiscal stimulus as the war in Ukraine continues. (Note: GDP growth figures are expected to be announced on February 6).
Speaking about the GDP trajectory, president Putin previously highlighted that "Taking the most recent three-year period, cumulative growth over the past three years totaled 9.7% as Russia is maintaining a solid pace of real wage growth and productivity." Russian Deputy Prime Minister Alexander Novak also outlined the main drivers of Russia’s economy remain manufacturing, mechanical engineering, pharmaceutical production, as well as software, and IT equipment.
We think CBR’s previous monetary tightening, sanctions, supply side constraints, relative RUB resilience and price pressures will remain restrictive over growth figures. Capacity utilization in Russia reached its maximum in years, and labor force deficit is unlikely to change in the short term until the war in Ukraine is over will ignite more frictions.
Despite problems, the easing cycle by CBR could slowly reignite growth but this will take time. The key for Russian economic growth in the next few years will be if a deal in Ukraine will be sealed, and when (and which) sanctions will be lifted. We envisage growth to hit 1.1% in 2026 as tightening cycle is still feeding through and easing effects will only come through fully into H2 2027/2028.