The Central Bank of Russia has concluded that after three quarters of slowing economic growth in the Russian Federation, it could turn into a recession by the end of 2025.
Points of attention
- With labor market tensions, high inflation rates, and growing economic risks, the Central Bank tries to address the challenges to prevent further decline.
- Analysts warn of the possibility of a major economic downturn in Russia, highlighting the need for effective measures to stabilize the economy.
The Russian economy is on the verge of collapse
According to official data from the Russian Ministry of Economic Development, in July-September, GDP increased by 0.6% in annual terms after growing by 1.1% in the second quarter, 1.4% in the first, and 4.5% in the fourth quarter of last year.
Against this background, there was a temporary surge in production in certain industries.
The Central Bank of the Russian Federation decided to lower its forecast — that is why it expects annual GDP growth in the fourth quarter to range from minus 0.5% to plus 0.5%.
It is worth noting that in the summer the Russian Central Bank did not allow a recession and predicted growth of 0% to 1% in October-December.
The quarterly decline in annual terms will be Russia's first since January-March 2023: then the economy fell by 1.6%, after which it only worked in the black.
As analysts note, GDP growth in the third quarter of this year turned out to be much lower than the Russian authorities had expected.
The Central Bank of the Russian Federation is trying hard to convince Russians that the "overheating of the economy" is gradually decreasing.
However, the unpleasant truth for the Kremlin is that labor market tensions, persistent inflation rates above 4%, and model calculations suggest that the overheating could be even more extensive.
