Page 4 - bne IntelliNews Russia OUTLOOK 2025

Executive Summary
Economic outlook
Russia had a better than expected first half of 2024, defying earlier forecasts and was on course to end the year with 3.8-4% growth. However, that is coming to an end.
“Despite its best efforts, the Kremlin has not been able to simultaneously fight its war in Ukraine, fund social and infrastructure projects, and keep inflation and the ruble under control. The economy hit a wall this year: there is no spare industrial capacity; there are no more workers; and exports are being squeezed by Western sanctions,” says Alexandra Prokopenko, a political economy analyst.
The CBR posted a pessimistic medium-term macroeconomic outlook at the start of August that predicts the economy will hit a brick wall in the first half of 2025. Growth will fall to 0.5-1%. Consumption growth will fall to zero. And inflation and interest rates will stay high. If the liberal macro team trying to rescue the situation fails then Russia faces stagflation for several years.
As 2024 came to an end a debate was raging over what comes next. Many were predicting a wave of bankruptcies due to unsustainable borrowing costs, while others argued that Russia’s economy is more robust than it looks.
"Those who have lost most economically in Russia this year are Putin’s core supporters: state employees. That means doctors, teachers,
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