Russia Cuts 2025 GDP Growth Forecast to 1.5%

Russia expects economic growth to ease to 1.5% in 2025, down from earlier forecasts of 2.5%, as high interest rates imposed to reduce inflation have stifled borrowing, Finance Minister Anton Siluanov told President Vladimir Putin on Wednesday, as Reuters reported. Russia’s war economy grew robustly at 4.1% in 2023 and 4.3% in 2024, despite multiple rounds of Western sanctions imposed after its invasion of Ukraine in 2022. Economy Minister Maxim Reshetnikov warned in June that Russia was on the brink of slipping into recession unless monetary policy changed. Russia’s highest military spending since the Cold War has stoked inflation, prompting the central bank to raise its key interest rate to 21% in October, the highest level since the early years of President Vladimir Putin’s rule in 2003. The central bank cut the interest rate to 20% in June and then to 18% in July, but the economy is still shackled by the cost of credit and labor shortages, according to analysts.