Western analysts predict a worsening of the financial and economic situation in Russia in 2025 and emphasize the risks of stagflation. They outline five challenges for the Russian economy in 2025, assuming the continuation of the Russia-Ukraine war:
Accelerating Inflation Rates
By the end of 2024, annual inflation in Russia reached 9.5%, compared to 7.4% in 2023.
High Interest Rates
The Central Bank of Russia's key interest rate is currently maintained at 21%. A possible reduction of the interest rate is not expected before mid-2025, with forecasts suggesting a decrease to 17–18% by the end of 2025. If inflation persists, the Central Bank of Russia may decide not to lower the rate in 2025.
Slowing Economic Growth Rates
The Russian government predicts that economic growth will slow from 4% in 2024 to 2.5% in 2025. However, according to international organizations, GDP growth in 2025 is expected to range from 1.4% (IMF) to 1.6% (World Bank), considering the "overheating" of the economy due to high military spending. One of the main risk factors for the Russian economy remains the labor shortage, which is expected to persist in the long term. According to the Central Bank of Russia, the unemployment rate will be 2.4% in 2024, 2.6% in 2025, 2.8% in 2026, and 3.0% in 2027.
Budget Deficit
Preliminary estimates from the Russian Ministry of Finance indicate that the federal budget deficit reached $35.6 billion (1.7% of GDP) in 2024. The liquid portion of the National Wealth Fund decreased from $55.9 billion at the beginning of 2024 to $37.5 billion at the beginning of 2025.
Ruble Volatility
If oil prices decline, exports continue to shrink, and inflation remains high in 2025, the USD exchange rate may rise to 113–118 rubles. In 2024, the Russian ruble depreciated against all major world currencies: by 13.4% against the USD, nearly 7% against the euro, and 6.8% against the yuan.
Despite the Kremlin's rhetoric about the resilience of the economy and the lack of transparency in Russian state statistics, Western experts acknowledge the existence of systemic problems in Russia's economy that continue to deepen.
