Moscow, Aug 28 (V7N) – Russia’s economic growth is projected to slow sharply to 1.5% in 2025, down from the earlier forecast of 2.5%, as the high cost of borrowing and inflation constraints weigh heavily on expansion, Finance Minister Anton Siluanov warned President Vladimir Putin.
 
Russia's booming wartime economy, which grew 4.1% in 2023 and 4.3% in 2024, has begun entering a pronounced slowdown phase in 2025. Sluggish growth is attributed to the combined impact of elevated interest rates and labor shortages that are crimping investment and output.
 
In a meeting with President Putin, Siluanov explained that stringent monetary policy—designed to rein in double-digit inflation—has caused a severe downturn in loan uptake. Key interest rates were raised to 21%, the highest since the early 2000s, before being lowered to 18% by July, though high borrowing costs persist.
 
The slowdown is already visible in recent data: Russia's GDP grew just 1.1% in the second quarter of 2025, a significant drop from 4.0% during the same period last year, according to Rosstat.
 
The IMF has responded to these downward trends by further revising its forecast, now expecting a modest 0.9% growth for Russia in 2025.
 
Echoing the cautious tone, Economy Minister Maxim Reshetnikov had previously cautioned in June that without timely loosening of monetary policy, Russia could slip into recession. He also called for easing interest rates to preserve stability in key industrial sectors.
 
Beyond monetary policy, analysts warn that sustaining Russia’s defense-driven growth while managing inflation may require unpopular measures, including tax increases and public spending cuts.
 
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