After two years of a wartime \u201cboom,\u201d when Russia\u2019s GDP grew by more than 4% annually, the country\u2019s economy has entered a recession, said Andrey Klepach, chief economist at VEB \u2014 one of Russia\u2019s largest state banks with the status of a \u201cstate development corporation\u201d that finances Kremlin national projects.<\/p>\n
According to VEB\u2019s estimates, in the second quarter Russia\u2019s GDP fell by 0.6% compared to the first quarter. In the first quarter, it had already declined by the same 0.6% versus the fourth quarter. Two consecutive quarters of negative growth are considered a \u201ctechnical recession.\u201d<\/p>\n
On a year-over-year basis, Russia\u2019s economy remains in positive territory, but growth has slowed sharply. In Q4 2024, it stood at 4.5%, while in Q1 2025 it dropped to 1.4%, and in Q2 \u2014 to just 1.1%. In July, according to Russia\u2019s Ministry of Economic Development, annual growth nearly stalled at 0.4%.<\/p>\n
Industry is also on the verge of stagnation, with only 0.7% growth in July. Sectors expected to drive import substitution have fallen into a deep slump: clothing production dropped 7% year-on-year, furniture production 12%, and electrical equipment 6.5%. Metallurgy has been hit by the sharpest recession since the start of the war, with output plunging 10.2%.<\/p>\n
Klepach\u2019s assessment of a technical recession is shared by analysts at MMI, while Raiffeisenbank and Capital Economics argue that the economy avoided recession, posting 0.3% growth versus the first quarter.<\/p>\n
Still, it is clear that the economy is \u201cteetering on the edge of recession\u201d and will likely slide into it in the coming quarters, believes Tatiana Orlova, chief economist at Oxford Economics. The economy is being pressured by imbalances accumulated during the war, adds Liam Peach, economist at Capital Economics.<\/p>\n
More than 20 trillion rubles handed out by the state to soldiers, contractors, and defense plants created the illusion of prosperity. But the price has been paid in the form of surging inflation, higher interest rates, and mounting problems for businesses.<\/p>\n
The situation is further complicated by sanctions, low oil prices, and weak private property rights, which discourage investment, concludes Alexander Kolyandr, senior fellow at CEPA.<\/p>\n","protected":false},"featured_media":150185,"menu_order":0,"template":"","newscat":[9],"newstag":[31525,31526,31524],"issues":[],"class_list":["post-150184","news","type-news","status-publish","has-post-thumbnail","hentry","newscat-novosti","newstag-sanctionseconomicsanctionssanctionsagainstrussiaglobalsanctionssanctionpressuregeopoliticalrisks","newstag-sankczyykonomycheskyesankczyysankczyyprotyvrossyymezhdunarodnesankczyysankczyonnoedavlenyesankczyyyvlyyanye","newstag-sankcziyiekonomichnisankcziyisankcziyiprotyrfglobalnisankcziyisankczijnatyskmizhnarodnisankcziyi"],"_links":{"self":[{"href":"https:\/\/ldaily.ua\/en\/wp-json\/wp\/v2\/news\/150184","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ldaily.ua\/en\/wp-json\/wp\/v2\/news"}],"about":[{"href":"https:\/\/ldaily.ua\/en\/wp-json\/wp\/v2\/types\/news"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ldaily.ua\/en\/wp-json\/wp\/v2\/media\/150185"}],"wp:attachment":[{"href":"https:\/\/ldaily.ua\/en\/wp-json\/wp\/v2\/media?parent=150184"}],"wp:term":[{"taxonomy":"newscat","embeddable":true,"href":"https:\/\/ldaily.ua\/en\/wp-json\/wp\/v2\/newscat?post=150184"},{"taxonomy":"newstag","embeddable":true,"href":"https:\/\/ldaily.ua\/en\/wp-json\/wp\/v2\/newstag?post=150184"},{"taxonomy":"issues","embeddable":true,"href":"https:\/\/ldaily.ua\/en\/wp-json\/wp\/v2\/issues?post=150184"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}