Compared to June (economic growth by 1 % of GDP), the economy slowed down 2.5 times, and compared to December last year (4.5 percent)- up to 11 times. The economic slowdown in Russia results from activities aimed at limiting inflation, which increased after how The Kremlin opened its treasures to finance the war and relieve the effects of sanctions.
– Currently, Russia is balancing on the brink of recession – notes Tatiana Orłowa, an economist from the Oxford Economics Economic Advisory company. If the Kremlin decides to extend the war, additional strict sanctions, probably aimed at the energy sector, according to the experts, they can provoke the collapse of the economy.
The Kremlin's war expenses increased the demand, but the supply was behind the shortage of workforce and higher logistics costs caused by sanctions, which resulted in prices.
Unstable, high inflation hinders planning, which is why the central bank raised interest rates to cool the economy, encouraging to save and increase loan costs for enterprises. After a year of restrictive monetary policy, signs of braking the economy are currently visible.
On the border of stagnation – with a meager increase of 0.7 percent – There was an industry. The industries that developed dynamically last year, plunged into a deep recession. The production of clothing has fallen by 7 percent, furniture – by 12 %, electrical equipment – by 6.5 percent The decrease in metallurgy accelerated to 10.2 percent.
Continued article under video material
In the period of January -July, food production fell by 1.1 percent, and freight transport decreased by 1.5 percent. Even in industries related to the arms industry (production of “finished metal products”, production of “computers, electronics and optics”) growth rate has dropped 3.5-5 times.
“The economy apparently begins to suffer from an imbalance that has grown during the war,” says Liam Peach, senior economist for emerging markets at the Capital Economics analytical center. Over 20 trillion rubles (approx. PLN 910 billion, counting at the current exchange rate), which the state distributed to the army, contractors and defense plants, created the illusion of wealth. The payment came, however, in the form of a rapid increase in inflation, increases in interest rates and increasing problems in business.
– The surplus of funds, which was used to stimulate the economy, is exhausted. To continue supporting the arms industry, the authorities will have to raise taxes and withdraw funds from civil sectors, which will slow down economic growth – says Russian economist Władisław Inoziemcew in an interview with The Moscow Times.
“The slowdown will probably deepen at the end of 2025”
The Russian economy has been balancing on the brink of recession for months, because the authorities take action to slow down economic growth to avoid galloping inflation.
Targ in Rostów nad Don (illustrative photos)OLGA MALTSEVA AFP / AFP
Most analysts – including Russian economist Dmitry Polewoj – estimates that in fact the economy stood still (“increase” by approx. 0 percent of GDP).
In turn, Liam Peach, an analyst from the Capital Economics analytical center, and Stanisław Muraszow, an economist from the Moscow branch of Raiffeisenbank, estimated that the increase in the second quarter would be minimal (at 0.3 percent).
Sofia Donec, the main economist of the Moscow Brokerage House of T-Investments, told the Russian business journal “Wedomosti” that the slowdown would probably deepen at the end of 2025 and at the beginning of 2026 in connection with general stagnation in several sectors of the economy.
I’m Ashley Davis as an editor, I’m committed to upholding the highest standards of integrity and accuracy in every piece we publish. My work is driven by curiosity, a passion for truth, and a belief that journalism plays a crucial role in shaping public discourse. I strive to tell stories that not only inform but also inspire action and conversation.
