Russian President: Russian economy growth slowed to 1% in 2025
Russian President Vladimir Putin said on Tuesday that Russia’s economic activity grew by just 1% in 2025, a much slower rate than a year earlier, as the economy struggled to recover from the war in Ukraine.
Massive military spending at the start of the conflict supported growth and enabled Moscow to avoid expectations of an economic collapse after the offensive began in 2022.
However, higher spending contributed to higher inflation, putting pressure on real growth, and companies complained about high borrowing costs imposed to curb prices.
“Russia’s GDP grew by 1% last year… This figure is lower than the dynamic we have seen previously: in 2023 and 2024, growth was 4.1% and 4.3%, respectively,” Putin said during a government meeting.
He added that the slowdown wasn’t only unexpected, but somewhat intentional, as it was linked to measures to curb inflation.
He explained that inflation fell to 5.6% last year, compared to 9.5% a year ago.
Russia’s central bank cut its key interest rate to 16% in December as inflation showed signs of slowing, although the official statistics agency RSTAT doesn’t expect to reach a 4% target before 2027.
“The mission is clear: the growth of the national economy must be reactivated, the business climate must be improved, investment must be increased with a focus on raising labor productivity,” Putin stressed.
Moscow has previously announced that its revenues from oil and gas — the main pillar of state finances — have fallen to a five-year low.
The energy sectors and a large number of Russian companies have been under European and US sanctions since Russian forces invaded Ukraine in 2022.
