Economic growth in Russia has stopped – this is the conclusion reached by experts from the Institute of National Economic Forecasting (INP) of the Russian Academy of Sciences. After a 0.6% contraction in Russia’s GDP in the first quarter, GDP growth in the second quarter (relative to the previous period) is estimated at 0%.

On September 12, Rosstat published data on GDP in the first half of the year, which shows that in the second quarter, the Russian economy still grew slightly: the growth rate in annual terms, excluding seasonality, was 1.5%, or about 0.4% per quarter, writes The Moscow Times.

However, this does not fundamentally change the picture.

“The Russian economy continues to balance between stagnation and recession. The cessation of growth can already be considered a statistical fact,” the INP said.

There has been debate for several months about whether Russia is in recession (a decline for two consecutive quarters), and the chairman of the board of Sberbank and former Russian Economy Minister Herman Gref even spoke of “technical stagnation.”

Russian President Vladimir Putin assured that this was not the case – the economy was simply undergoing a “soft landing” , but then criticized officials for its sharp slowdown . 

The Russian economy has long been divided into a successful military and a surviving civilian economy: military spending is growing, and the Russian Ministry of Finance is actively advancing government orders, and the Central Bank of Russia is compensating for this with a high key rate that hits those who are not related to government spending. 

These two components form the overall result, which is gradually worsening: growth in the military-industrial complex is slowing down, while decline in civilian sectors is accelerating.

“July and August show quite clear symptoms that we are approaching zero,” Gref said.

In the real sector, there is an increasingly clear trend towards a reduction in output and a deterioration in the financial and economic condition of enterprises, write INP experts. The behavior of indirect indicators suggests a high probability of a reduction in investments in the second half of the year.

If things continue like this, the Russian economy will continue to teeter on the edge of recession in the second half of the year, and by the end of the year, growth will be about 1%. 

At the same time, the state is unlikely to be able to help the economy. As noted in the INP, the possibilities for supporting high rates of budget spending have practically been exhausted .

Recall that, according to the Russian Ministry of Finance, the federal budget deficit of the Russian Federation in January-July 2025 reached 4.9 trillion rubles, which is 4.4 times more than on the same date a year earlier (1.1 trillion rubles).

At the same time, budget expenditures increased by 21% to 25.19 trillion rubles, and revenues by only 3% to 20.32 trillion rubles.

According to Reuters, the Russian government is preparing to raise taxes and cut spending in an attempt to maintain a high level of defense spending amid a slowing economy.

It also became known that the revenues of the consolidated budget of the Russian Federation (excluding extra-budgetary funds) in 2025 may decrease to 61 trillion rubles , compared to 61.3 trillion rubles last year.

It was also reported that the deficit of the consolidated budget of Russia for 2025-2027 will amount to 5.1% of GDP. Thus, this year, a “hole” of 2.4% of GDP will appear in the budget system of the Russian Federation – a record since the coronavirus pandemic (then the deficit of the consolidated budget reached 4.6% of GDP).

Earlier, the head of the Russian Ministry of Economic Development, Maxim Reshetnikov, said that the Russian economy was on the verge of recession .

For her part, the head of the Central Bank of Russia, Elvira Nabiullina, stated that the resources that allowed the Russian economy to show growth for two years in the face of a full-scale war against Ukraine and sanctions have been exhausted.

At the same time, Russian companies have sharply reduced their investment programs  in 2025, planning to invest 733 billion rubles (almost $9 billion) less than in 2024.

Author:  Halyna Yalivets Джерело: https://censor.net/n3574469

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