Page 23 - bne IntelliNews Russia OUTLOOK 2025

According to RosStat's preliminary estimate, Russia's GDP grew by 3.1% y/y in July-September. GDP growth slowed significantly in the autumn of 2024 and will continue to decelerate into 2025. All key sectors have developed less well during the autumn months than at the beginning of the year.
Growth in fixed investment in branches supporting the war effort and import-substitution policies should remain strong due in part to government loan subsidies and tax breaks. Notably, the rise in interest rates didn’t slow the growth of the corporate loan portfolio until November, which points to a relatively large proportion of fixed rate and subsidised loans.
The forms of state support vary from fixed interest rate loans to state guarantees and low-cost loans through state development banks. In general, fixed rate corporate loans make up more than half of the loan portfolio, and a quarter of these are state-subsidised loans.
Y/Y change in Russian GDP, %
2021 2022 2023 2024 2025 2026
Y/Y change 5.9 −1.2 3.6 31⁄2 1 1
Sources: RosStat figures for 2020 through 2023 and up to September 13, 2024; BOFIT projections for 2024 through 2026 starting from October 1, 2024.
Uncertain future
Economists point out that there is a great deal of uncertainty over what comes next. Analysts keep getting Russia wrong, overestimating the power of sanctions, underestimating the quality of the country’s economic leadership and its ability to remake its markets in the face of sanctions.
In April 2022 the World Bank predicted Russia’s GDP would decline by 11.2% by the end of the year, but the final estimate came to only minus 2.1%. In 2023, the Russian economy grew by 3.6% against the January IMF forecast of 0.3%; and in 2024 its growth could achieve 3.8-4.0%, while at the start of the year international experts gave a figure of just 1.3%. These are not small mistakes. They demonstrate a deep misunderstanding of what is happening in Russia, the authors argue, and lead to very poor policy recommendations.
23 Russia OUTLOOK 2025 www.intellinews.com