Russia’s Economy Faces Prolonged Struggles
After demonstrating notable resilience against sanctions during the latter half of 2024, the Russian economy shifted into an overheating stage at the start of 2025.
This growth cycle, driven by rapidly expanding government expenditures in the defense sector and rising domestic consumption, eventually encountered production limits and the restrictive effects of stringent monetary policy from mid-2025 onward.
According to data compiled by a news agency, the growth rate, which had reached 3.6% at the close of 2024, dropped to 0.6% in the third quarter of 2025—its lowest point in two years.
The Russian Economic Development Ministry adjusted its 2025 growth projection downward, from 2.5% at the year’s outset to 1% in September, citing declining global energy prices and reduced investor interest.
The Russian Central Bank’s firm interest rate stance, introduced to contain inflation surpassing 10%, became a central focus of economic policy in 2025.
The benchmark rate, which started the year near 21%, remained at high double-digit levels throughout most of the year, reflecting strong domestic demand and ongoing labor shortages.
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