Russian economic growth slowing down, Rosstat reports
kyivindependent.com

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[…]

Russia’s economy is experiencing a sharp slowdown in growth, according to a report released by the governmental statistics agency Rosstat on May 16.

Gross domestic product (GDP) only grew by 1.4% in the first quarter of 2025 – a notable decline from 4.5% growth in the previous quarter and 5.4% in the same period last year, the Moscow Times reported, citing Rosstat data.

The latest data from Rosstat came in below expectations: the Russian Economic Development Ministry estimated GDP growth at 1.7% and Bloomberg analysts predicted 1.8% growth.

According to Egor Susin, an executive from Gazprombank (the third largest bank in Russia, currently under sanctions), Rosstat’s data show a “sharp slowdown in the economy.”

[…]

Some aalysts point to Central Bank policies, sanctions, supply difficulties, and high inflation as reasons for the economy’s decline.

Moreover, “the situation is complicated by low oil prices,” Raiffeisenbank analysts note, as oil and gas revenues fell 10% from January to April.

A recent report from the Stockholm Institute of Transition Economics (SITE) also revealed that, despite narratives from the Kremlin, Russia’s economy is under increasing strain from its war in Ukraine and Western sanctions.

A recent Reuters calculation sees Russia’s oil and gas revenue -the most important source of cash for the Kremlin, accounting for about a quarter of total federal budget proceeds- falling by a third in May 2025 from a year earlier to 0.52 trillion roubles ($6.48 billion), the lowest level since July 2023 amid weaker oil prices and a stronger rouble.

As Moscow and Kyiv discuss potential peace deals, the Russian economy may face another shock if military spending is reduced. Conversely – if peace talks fail – Europe and the United States may impose additional sanctions on Russia, putting further strain on its economy.

  • HotznplotznOPEnglish
    14·
    2 days ago

    Yes, and many economists (inside and outside Russia) estimate that there will be no real GDP growth this year, maybe not even a nominal growth. Russia’s National Wealth Fund -which has been used to cover up the country’s budget deficit from 2022-2024- could run out of cash by the end of 2025: the NWF’s liquid portion stood at 32% at the end of 2024, down from 42% in 2023, and 58% in 2022.

    In 2025, military spending is likely to exceed oil and gas revenues for the first time in Russia’s history. In the 2000s, for example, military spending reached 30-35% of oil and gas revenue.

    [Edit typo.]

    • Buffalox@lemmy.worldEnglish
      31·
      2 days ago

      not even a nominal growth.

      That’s equivalent to a decline equal to inflation, which is about 20%!

      • HotznplotznOPEnglish
        2·
        2 days ago

        The core inflation in Russia is ~10%, but that’s bad enough, especially given the state of the economy. (And prices increases for food in Russia a even far higher than 20%.)

        • Buffalox@lemmy.worldEnglish
          21·
          2 days ago

          The core inflation in Russia is ~10%

          AFAIK the official inflation is 9-10% The real inflation is closer to 20%.

          https://www.reuters.com/world/europe/russian-economy-worse-shape-than-moscow-says-report-eu-shows-2025-05-13/

          “Russia claims inflation is 9-10%. Why would they then have a policy rate of 21% at the central bank? Which regular central bank would have a policy rate that’s basically 11.50 percentage points higher than the inflation rate? If any of our central banks were doing something like that, they would be out of their job the next day,” Becker told reporters.

          So all we know is that we can’t trust the official number, and the real rate is clearly higher.

          • HotznplotznOPEnglish
            2·
            2 days ago

            The official inflation rate in Russia is 10.2% for April 2025 (year-on-year). But, yeah, I don’t trust all their numbers either …

            • Buffalox@lemmy.worldEnglish
              31·
              2 days ago

              https://www.reuters.com/world/europe/russian-economy-worse-shape-than-moscow-says-report-eu-shows-2025-05-13/

              “Russia claims inflation is 9-10%. Why would they then have a policy rate of 21% at the central bank? Which regular central bank would have a policy rate that’s basically 11.50 percentage points higher than the inflation rate? If any of our central banks were doing something like that, they would be out of their job the next day,” Becker told reporters.

              So all we know is that we can’t trust the official number, and the real rate is clearly higher.

              • HotznplotznOPEnglish
                3·
                2 days ago

                So all we know is that we can’t trust the official number, and the real rate is clearly higher.

                I fully agree.

    • Buffalox@lemmy.worldEnglish
      11·
      2 days ago

      In 2025, military spending is likely to exceed oil and gas revenues

      And the oil and gas is barely profitable now because of lower prices. I bet expenses have increased too.