Key Highlights of Russia’s Economy in 2025
Economic Growth and Stagnation
Russia’s GDP growth has slowed sharply, with forecasts suggesting growth at or below 1% for the yearBOFIT.
The economy is entering a phase of “very severe stagnation”, with both domestic and international analysts warning of long-term structural declineDaily Express.
Budget Deficit and Spending Surge
Despite a 20% rise in revenues early in the year, Russia’s budget deficit hit 3.4 trillion rubles (1.5% of GDP) by May—nearly five times higher than the same period in 2024bakunetwork.org.
This deficit already accounts for 89% of the full-year target, driven by escalating military expenditures and falling energy revenues.
Energy Sector Under Siege
Ukraine’s long-range strikes on Russian oil infrastructure have severely disrupted exports, causing:
Fuel shortages across regions
Spikes in domestic fuel prices
A projected $100 billion deficit due to lost oil and gas revenuesDaily Express
Inflation and Monetary Policy
The Central Bank raised its 2026 inflation forecast to 4–5%, citing:
Upcoming VAT increases
Price adjustments
Inflation expectations driven by sanctions and war costsDaily Express
Real interest rates remain high (18% vs. 4% inflation), suppressing credit demand and private investmentnestcentre.org.
If a communist revolution breaks out in Russia in 2025 like ...
Sectoral Divide
Military-linked industries are propped up by state spending.
Civilian sectors—especially retail, construction, and services—are contracting due to weak demand and high borrowing costsnestcentre.org+1.
Geopolitical and Sanctions Pressure
New sanctions from the U.S. and allies, including on Lukoil and Rosneft, are tightening the noose on Russia’s energy-dependent economyDaily Express.
The Kremlin continues to rely on financial reserves and state control to stabilize key sectors, but analysts warn this is unsustainable in the long termThe Moscow Times.
BOFIT Forecast for Russia 2025–2027
Russia economy meltdown as Putin faces prospect of 'very severe stagnation'
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