Russian economic growth slowing down, Rosstat reports
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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
    2·
    2 days ago

    Inflation, devaluation, reduced incomes: Russia’s economy in an era of falling oil prices - [April 2025]

    Russia’s oil and gas revenues have already fallen by 10% — and that may be just the beginning. Oil prices are sliding amid fears of a global economic slowdown triggered by the US-China tariff war, along with rising production from OPEC+ countries. Goldman Sachs warns that in a worst-case scenario, oil could plunge to $40 a barrel by 2026. Even the bank’s more moderate forecast isn’t much better: $55 a barrel. For Russia, that could mean: at best; another round of inflation and ruble devaluation; and at worst, a banking crisis and industrial shock.

    In response to the decline in oil revenues, the authorities may also choose to cut spending. The Russian government has its own unique methods for doing this, as Mikhaylova points out: shifting the state’s responsibilities onto businesses. “This is already happening. For example, large enterprises — whether state-owned, municipal, or private — are being forced to hire those who are going to war as mercenaries, paying them salaries from company funds,” [one expert] explains. If budget revenues continue to fall, this will likely become more common.

    According to [another expert], all of these measures lead to inflation, and if oil prices stay low for an extended period, Russia will face a real crisis: “It’s unlikely we’ll see empty store shelves like in the late Soviet Union, or widespread wage non-payments like in the early '90s. Since the government prints money and the macroeconomic team is fairly pragmatic, we’re more likely to follow in the footsteps of Argentina and Turkey — maintaining a market economy, but one that’s growing increasingly poorer.”