Saturday, June 13, 2026 The English edition of ostwirtschaft.de Newsletter
Eastern Economy.
Economic intelligence on Eastern Europe, the Caucasus & Central Asia
Russia  ·  Chronicles · Klaus Dormann

Forecasts for Russia's growth continue to decline

November 18, 2025  ·  10 min read  ·  By Klaus Dormann  ·  Original (German)
Forecasts for Russia's growth continue to decline

Author: Klaus Dormann

On Friday, the Russian Federal State Statistics Service (Rosstat) announced in a “preliminary estimate” that total economic output in the third quarter of 2025 was only 0.6 percent higher than a year earlier. The Rosstat estimate thus confirmed figures from the Ministry of Economic Development. Russia’s annual growth rate slowed significantly further in the third quarter. In the first quarter of 2025, it had reached +1.4 percent, and in the second quarter, +1.1 percent.

In the current fourth quarter of 2025, many analysts estimate that output in the Russian economy could even be lower than a year ago. In the fourth quarter of 2024, real gross domestic product had risen unusually sharply (+4.5% compared to the fourth quarter of 2023).

However, it is not expected that Russia’s GDP for the full year 2025 will be lower than in 2024, meaning there will be a “recession” this year. Since the beginning of 2025, however, forecasts for the annual growth of the Russian economy have been significantly lowered.

The European Commission now expects growth of only 0.8 percent in 2025

In May, for example, the European Commission still assumed in its “Spring Forecast” that the growth rate of the Russian economy would decline from +4.3 percent in 2024 to +1.7 percent in 2025. In its “Autumn Forecast” published on November 17, it revised its expectation for Russia’s economic growth this year down even further to just +0.8 percent.

The German “German Council of Economic Experts” revised its forecast for Russia even more sharply. In May, the “economic experts” had still predicted that the Russian economy would grow by +2.7 percent in 2025. Now, in its annual report, the Council of Economic Experts expects real gross domestic product to rise by only +1.0%. This forecast aligns with the forecast for Russian economic growth issued by German economic research institutes in their “Joint Diagnosis” from September.

Since late September, the Russian government has also been factoring in just 1 percent economic growth for 2025 in its budget planning. Analysts surveyed by Interfax in early November expect even slightly weaker growth this year, averaging +0.9 percent.

GDP Forecasts 2024 to 2026
Change in real gross domestic product compared to the previous year in percent

No “recession” is expected in the 2025/2024 year-over-year comparison

According to the forecasts in the table above, year-over-year growth of at least +0.6 percent is currently expected for the Russian economy in 2025 compared to 2024 (IMF forecast from mid-October).

Nor has there been a so-called “technical recession” so far in 2025, at least according to estimates by the Russian Federal State Statistics Service (Rosstat). For a “technical recession” to occur, the price- and seasonally-adjusted gross domestic product would have had to decline in at least two consecutive quarters compared to the previous quarter (definition by the German Federal Statistical Office, Destatis). In the first quarter of 2025, real gross domestic product was 0.6 percent lower than in the fourth quarter of 2024, according to Rosstat. However, according to Rosstat, it rose again by 0.4 percent in the second quarter compared to the first quarter (see blue bars in the following figure from the Kyiv School of Economics).

Quarterly trend in real gross domestic product
blue bars: changes compared to the previous quarter in %, seasonally adjusted
black line: changes compared to the same quarter of the previous year in %

Kyiv School of Economics: Russia Chartbook September 2025, 10/09/25

As the black line in the figure shows, the annual GDP growth rate fell from +1.4% in the first quarter of 2025 to +1.1% in the second quarter, according to Rosstat. In the third quarter of 2025, the annual GDP growth rate, according to Rosstat, was only +0.6%.

In September 2025, GDP was 0.9% higher than in September 2024, according to the Ministry of Economic Development. In the first nine months of the current year, it rose by 1.0% year-over-year (Prime.ru).

EU: From 2025 to 2027, Russia’s GDP will grow by only about 1 percent per year

In its “Autumn Forecast,” the European Commission also notes in an analysis of economic developments in Russia that a “technical recession” was avoided in Russia thanks to economic growth of 0.4 percent in the second quarter of 2025 compared to the first quarter.

For growth and inflation trends from 2025 to 2027, the Commission highlights the following:

After two years of overheated economic activity, with annual output growth exceeding 4% since early 2025, Russia’s economic growth has slowed significantly. It is expected to decline to +0.8% in 2025. After that, it is projected to pick up slightly again. GDP growth is expected to reach +1.1% in 2026 and +1.2% in 2027.


The inflation rate, which peaked at 10.3% in March 2025, is gradually declining due to high interest rates. The annual average increase in consumer prices in 2025 is expected to be 8.9%. It is projected to fall to 5.4% in 2026 and to 4.6% in 2027.

The Commission cites capacity constraints and the central bank’s “restrictive monetary policy” as the causes of the “dramatic slowdown” in economic growth from +4.3% in 2024 to an expected +0.8% in 2025. The sanctions imposed by the EU and its allies have exacerbated “macroeconomic imbalances” such as high inflation, rising private debt, and the deterioration of the fiscal situation. The Commission emphasizes that the economic downturn is primarily attributable to the negative effects of Russia’s war of aggression against Ukraine.

In 2025, private consumption remains a key driver of growth

Regarding the trend in consumption and investment so far in 2025, the Commission notes:

Despite record-high interest rates, private consumption remained a key driver of growth, primarily thanks to robust growth in real wages, which was supported by a persistently tight labor market.


Government consumption continued its comparatively slow growth pace
from the second half of 2024, as military spending stabilized.

Investment began to decline in the second quarter of 2025. The dampening effect of high interest rates on the performance of “civilian” sectors without demand from the military sector could no longer be offset by government investment and support measures.

As the excerpt from the Commission’s forecasts in the following table shows, the Commission expects private consumption to grow by 2.3 percent for the full year 2025 (2024: +5.4%). Government consumption is expected to rise by only +1.0% (2024: +4.8%). Growth in gross fixed capital formation is projected to slow from +6.0% to just +0.2%.

EU Commission Forecasts on Growth and Employment in Russia

European Commission: Autumn 2025 Economic Forecast, Russian Federation 11/17/25

The trend in net exports is slowing Russia’s growth somewhat

According to the European Commission’s assessment, the development of Russia’s foreign trade will slightly slow overall economic growth during the forecast period from 2025 to 2027. It anticipates that the “global environment” for the Russian economy will deteriorate. Combined with sanctions, this is expected to have a negative impact on the development of Russian exports. At the same time, the development of Russian imports is likely to receive growth impulses from trade diversion and favorable “terms of trade.” The European Commission therefore expects Russia’s net exports to make slightly negative contributions to growth in the years 2025 to 2027.

Here is how the Commission assesses the outlook for consumption and investment

According to the Commission’s assessment, private consumption will remain Russia’s key growth driver, although its growth in 2026 and 2027 is likely to be somewhat lower than in 2025 (yellow portion of the bar in the following figure).

Government consumption (blue portion of the bar) will continue to grow over the forecast period through 2027. However, its growth will slow as defense spending remains high but reaches a plateau.

Gross fixed capital formation (black portion of the bar) is expected to nearly stagnate in 2025. In the following two years, however, it will pick up slightly as inflation declines and the central bank cuts interest rates. Continuous public investment and subsidized private investment in war-related sectors are expected to prevent a decline in total investment in 2025. They will also support investment in the next two years.

Real Gross Domestic Product
Black line: Year-over-year GDP changes in percent;
bar segments: Contributions of expenditure categories to the GDP growth rate

European Commission: Autumn 2025 Economic Forecast, Russian Federation 11/17/25

Overall, the European Commission forecasts a sharp decline in GDP growth to +0.8% in 2025 (black line). In 2026, growth in aggregate economic output is expected to pick up slightly to +1.1% and to +1.2% in 2027.

Russia’s federal budget deficit will rise to 3.1 percent of GDP in 2025

According to the European Commission, Russia’s federal budget recorded a substantial deficit of 3.8 trillion rubles (1.7% of GDP) in the first three quarters of 2025. Weak global oil prices, Western sanctions against the Russian oil sector, and a rising ruble reduced oil and gas revenues in the Russian federal budget by 20.6% in the first three quarters compared to the previous year.

According to the European Commission’s assessment, these developments are expected to cause the Russian budget deficit to rise to 3.1% of GDP in 2025. In 2024, the deficit had fallen to 1.6% of GDP. 

The Russian government responded to the deterioration in fiscal performance by raising the value-added tax by 2 percentage points to 22% starting in 2026. Despite the government’s efforts to limit defense spending in the federal budget for 2026 and 2027, the European Commission continues to expect spending increases. However, it anticipates that the federal budget deficit will fall to 2.7% of GDP in 2026 and to 2.4% of GDP in 2027.

At the same time, it expects the public debt-to-GDP ratio to rise from 22.1% of GDP in 2025 to 24.2% in 2026 and 25.6% in 2027.

Recommended reading:

Translated from the German original published on ostwirtschaft.de, November 18, 2025.

More on Russia

All articles →
Controversial economic analyses at the St. Petersburg Economic Forum
Russia
Controversial economic analyses at the St. Petersburg Economic Forum
June 8, 2026
Sefe instead of Gazprom: Berlin continues to order Russian liquefied natural gas
Russia
Sefe instead of Gazprom: Berlin continues to order Russian liquefied natural gas
June 3, 2026
Analyst Survey: Growth Will Continue to Slow in 2026, but the Ruble Remains Strong
Russia
Analyst Survey: Growth Will Continue to Slow in 2026, but the Ruble Remains Strong
June 1, 2026

Intelligence from the East

The most important economic developments from Russia, Central Europe, Central Asia, Turkey and the Caucasus — free in your inbox.

No spam. Unsubscribe anytime.