Russia’s economy is heading toward stagnation rather than a “managed slowdown,” the World Bank said in its latest forecast, cutting its growth outlook and warning that output is unlikely to rise more than 1% per year through 2028.
The lender now expects Russia’s GDP to grow 0.9% in 2025, down from 1.4% in its June forecast, 0.8% in 2026 and 1% in 2027. It also projects a 0.4% decline in investment this year and a further 0.2% fall next year before modest recovery in 2027.
The World Bank cited falling oil prices, weaker exports and high interest rates as key drags on growth, saying fiscal stimulus has largely run its course while private demand and investment are under pressure. A persistent labor shortage is also likely to limit output.
The bank expects Russia’s budget deficit to widen to 2.9% of GDP this year — higher than the Finance Ministry’s 2.6% forecast — and to remain near 2.7% in 2026-27.
Inflation, however, is seen easing from 7.5% this year to 4.5% in 2026 and 4% in 2027.
Other analysts have also revised forecasts downward. The Kremlin-aligned think tank CMACP expects GDP to rise just 0.7-1% this year and 1.4-1.7% in 2026, while a consensus of economists surveyed by Russia’s Central Bank in September lowered 2025 growth expectations to 1.6%.
Official projections remain more upbeat. The Economy Ministry forecasts growth of 1% this year and 1.3% in 2026, followed by an acceleration to around 2.5-2.8% later in the decade. The Central Bank sees GDP expanding 1-2% in 2025 and up to 2.5% by 2028.
Business leaders are less optimistic.
“Whether it’s a cooling or a controlled soft landing [of the economy], it’s not very soft — or very controlled,” said Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs.
Analysts note widening divergence between the defense-linked industries driving growth and the civilian sectors suffering sharp declines.
According to CMACP estimates, output in non-military industries has fallen 5.4% so far this year, leaving roughly a third of Russia’s real-sector companies under severe financial stress.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.
