Page 22 - bne IntelliNews Russia OUTLOOK 2025

2.1 GDP
Russia’s growth in 2024 was an estimated 3.8% – another strong year – but has been characterised as “growth without development.” Growth is expected to slow sharply in 2025 to 0.5-1%, according to the CBR, as the war stresses come home to roost.
Analysts predict growth of 1.8-1.9% annually from 2025 to 2027, with the long-term growth rate estimate unchanged at 1.8%. Cumulatively, GDP growth from 2021 to 2027 is now expected to be +12.2%, up from the previous estimate of +11.6%.
"Despite Russia’s subsidised mortgage programme being discontinued in the middle of this year, the construction sector still showed fantastic results (like many other sectors of the economy). Many industries are operating at over 80% capacity, with only Western sanctions and labour shortages preventing further expansion. Overall slowing growth is linked not only to reduced output in the extraction industries (this is driven by falling prices for raw materials), but also issues in the manufacturing sector. Indeed, the only manufacturing sectors where growth remains significant are those sectors that are directly linked to the military. In all other areas, growth is anaemic at best," says Prokopenko.
Fixed investment growth was strong in 2023 and 2024 as money was poured into the military industrial complex and will still rise in 2025, but at a much slower pace. Only investment in industries directly involved in the war effort will be sustained at high levels, even though the major surge in fixed investment has likely passed.
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