Russian Economic Update
In 2024, Russia’s economy saw an increase in GDP, consumer demand, and investment. What lies ahead in 2025?
2024 GDP higher than projected
At the start of 2024, the Russian government anticipated GDP growth of 2.8% by the end of the year. In the event, performance exceeded expectations. According to the Centre for Macroeconomic Analysis and Short-term Forecasting (CMASTF), GDP grew by 3.7–3.8% year-on-year from 2023, while the Institute of Economic Forecasting of the Russian Academy of Sciences (IEF RAS) reported 3.9% growth. These figures are largely consistent with estimates by the government and Central Bank of Russia.
Investment volume rose by 7.8%, driven by significant activity in mechanical engineering, the chemical sector, tourism, construction, and trade.
Consumer demand on the rise
By the end of 2024, the Ministry of Economic Development expected Russia’s retail turnover to increase by 7.7% compared to 2023. Sales data from Rosstat for January through October matched these expectations, showing a year-on-year rise of 7.5% for that period. This growth was brought about by positive consumer sentiment, with people feeling confident about the future due to low unemployment rates and high domestic labour demand. With job security no longer a major concern, consumers were willing to spend more.
Passenger car sales in Russia broke records in 2024. Find out more here.
Central Bank interest rate and economic outlook
Over the course of 2024, the Bank of Russia repeatedly raised its key interest rate to finally settle on 21%. This sparked concerns among businesses regarding further economic growth, as higher borrowing costs could stifle investment and complicate debt repayment, particularly for leasing agreements.
The Central Bank in turn justified the rate hike as necessary to curb inflation and cool credit activity.
Sergey Drobyshevsky,
Senior Research Fellow for Macroeconomics and Finance at the Gaidar Institute:
Russia’s economic growth is driven by domestic market development, non-resource and non-energy exports, and investment in local production. These factors are sensitive to inflation. A lower interest rate could push inflation to 15–20%, which would hurt growth even more than the high rate set by the Bank of Russia.
Inflation conundrum
Inflation exceeded its 4.5% target in 2024, reaching 9.5% year-on-year in December. In an analytical study, the CMASTF specifically highlighted accelerating price growth, with December 2024 prices up by as much as 10.1–10.2% from December 2023.
Denis Popov, Managing Expert at the PSB Centre for Analytics and Expertise, noted that prices were rising across a broad range of goods and services, which was “indicative of a steady trend.” According to Mr Popov, monthly inflation in early 2025 could exceed 10% year-on-year.
Rouble exchange rate volatility
Russia’s national currency has been gradually weakening. In 2024, it depreciated against 37 of the 42 currencies tracked by the Central Bank of Russia, with a drop of 6.4% against that currency basket.
November saw the rouble decline sharply against the bi-currency basket (USD and EUR), with a 7.3% drop that month, according to a study conducted by the CMASTF.
Exchange rate pass-through may shape the pricing backdrop for Russian inflation in 2025 and, by extension, Russia’s GDP; when the currency weakens, real incomes are squeezed.
Higher real rates may also cap GDP in Russia due to the cost of credit.
Rouble vs. dollar and euro, 2023–2025
Source: Ratestat
Fun fact
The origins of the names used for the Russian and Indian monetary units have much in common. Both currencies began as tangible physical objects made of precious metals. A rupee used to be a silver coin, while a rouble used to be part of a silver ingot. The word "rupee" comes from the Sanskrit "rupya", meaning "minted" or "made of silver", while "rouble", according to one version, derives from the word "to chop", referring to the way silver ingots (grivnas) were cut into pieces.
Continued growth in 2025
The Russian economic growth rate remains sensitive to tight financial conditions; higher rates can weigh on Russia’s GDP.
Analysts continue to track GDP growth in Russia alongside policy and external demand. Across the sources cited below, views on GDP growth in Russia vary, but Russia’s GDP 2025 profile points to moderate expansion in the near term.
According to government and expert consensus, Russia’s GDP is likely to continue to grow in 2025, though at a somewhat slower pace. According to analysts from the Gaidar Institute for Economic Policy, initial signs of economic cooling could be observed as early as mid-2024.
The Ministry of Economic Development estimates GDP growth at 1%. The Institute of Economic Forecasting predicts a rate of 2% in its quarterly analytical study.
Quick context: Economic growth in Russia remains driven by domestic demand and investment.
Sergey Drobyshevsky noted that some factors remained hard to predict, for example, the limits of import substitution and access to new markets in neutral and friendly countries. These factors could contribute to GDP growth eventually exceeding official forecasts. He also noted that current economic growth is drastically different from that of the 2010s, relying on domestic demand and manufacturing industry development rather than oil and gas exports.
One way to stimulate economic growth is by increasing labour productivity through automation. Read more about the digitalisation of the Russian economy here.
Russia’s manufacturing PMI, measured by S&P Global, reached 51.3 points in November 2024, up from 50.6 in September. While this is a generally modest figure—anything below 50 indicates contraction—the factors behind the increase are noteworthy. Starting from September, demand for industrial products grew, particularly in foreign markets, with Russian factories increasing their export sales for four consecutive months.
Macroeconomic forecast by SberCIB Investment Research (baseline scenario):
Together, these metrics frame the baseline Russian GDP forecast for 2025.
Source: SberCIB Investment Research
Bank of Russia’s key rate forecast for 2025
Bank of Russia survey (September 2025)
Consolidated budget balance 2025: –2.4% of GDP (median)
Source: Bank of Russia
Compared with Russia’s GDP in 2024, the implied Russian economic growth rate looks subdued.
Economic trends in Russia are largely dependent on the Bank of Russia’s key interest rate. In 2025, this will have an even greater impact than in previous years due to the need for tight monetary policy to curb inflation.
In a statement, the regulatory authority noted that "inflationary pressures will begin to decline in the coming months under the impact of tight monetary conditions and the cooling of lending activity," indicating a possible rate reduction.
Bank of Russia’s key rate changes, 2013−2024
Source: SberCIB Investment Research
However, a significant easing of monetary policy is unlikely.
Dmitry Polevoy, Investment Director at Astra Asset Management, forecasts a possible rate reduction to 15–16%, assuming GDP growth of 0.5–1% and 5.5% inflation.
According to Anton Tabakh, Chief Economist at Expert RA, a potential growth slowdown would affect different sectors of the economy in varying ways. Those dependent on the state budget are less sensitive to interest rate changes and, therefore, more resilient. However, other sectors are likely to be more severely impacted by higher borrowing costs.
Mr Tabakh anticipates ultra-high interest rates throughout the year, with a gradual reduction starting in the summer. By the end of 2025, he forecasts a rate of 18%, with 5% inflation and 1.5% GDP growth.
In late 2024, SberCIB Investment Research analysts predicted that Russia’s GDP will grow by an average of 2.5% annually in the coming years, with inflation stabilising at around 4%. They forecasted a cumulative GDP growth rate of 7.7% for 2025–2027.
The Bank of Russia, as of October 2025 projects 1% growth in 2025, 1.2% in 2026, and 1.8% in 2027. The survey implies a modest GDP growth rate for Russia in 2025, with risks balanced by policy.
Under these assumptions, Russian economic growth is expected to remain moderate through 2025. The figures for Russia’s GDP in 2024 set a high base, so the pace of Russia’s economic expansion is likely to normalise.