MOSCOW – Russia has revised its 2025 economic growth forecast down to 1.5% from the previously projected 2.5%, citing high interest rates and the economic strain of its war in Ukraine, Finance Minister Anton Siluanov told President Vladimir Putin.
The economy, which expanded 4.1% in 2023 and 4.3% in 2024 despite Western sanctions, is slowing sharply this year. High military spending has fueled inflation, prompting the central bank to raise its key interest rate to 21% in October before reducing it to 18% by July. Analysts say the cost of credit and labor shortages continue to constrain growth.
Economy Minister Maxim Reshetnikov warned earlier that Russia could slip into recession without adjustments to monetary policy. Industrial production is also expected to slow, with manufacturing growth revised to about 3% and industrial output to 2%, below earlier forecasts.
GDP grew 1.1% in the second quarter of 2025 compared to 4.0% in the same period last year. The International Monetary Fund now projects Russia’s overall 2025 economic growth at 0.9%.
With the economy decelerating amid continued war spending, Moscow may need to raise taxes and reduce other expenditures to maintain fiscal stability.
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