Since the onset of the full-scale aggression against Ukraine in 2022, the economy of the Russian Federation has undergone significant changes. During the first year of the war, the country’s gross domestic product shrank by 1.4%. According to estimates from the International Monetary Fund, GDP growth in Russia is expected to be only 0.6% in 2025, indicating a slowdown in economic development.
This is reported by Finway
Budget Deficit and Changes in Trade Structure
Against the backdrop of the war, Russia’s budget is facing a record deficit. In 2025, this figure is expected to be approximately 5.7 trillion rubles (around 68 billion dollars), nearly double the government’s initial plans. The main reason for this situation has been the decline in revenues from oil and gas exports, which were previously key sources of budget funding.
At the same time, the Russian economy is partially supported by active trade with China, India, and certain countries of the European Union. Throughout 2023, trade volume between Russia and China reached a historic high of over 240 billion dollars (in 2022, this figure was 190 billion dollars), and in 2024, a new record was set at nearly 245 billion dollars. The backbone of Russian exports consists of energy resources, while China predominantly imports industrial products, including cars, electronics, and equipment.
Decline in Investments and the Impact of Sanctions
A contrasting trend is demonstrated by the trade turnover between Russia and the EU. In 2023, EU exports to the Russian Federation amounted to 34 billion dollars, which is 67.4% less compared to 2021. Imports from Russia to EU countries have decreased even more significantly over four years, down to 36.3 billion dollars, representing a decline of 79.2% compared to 2021.
Due to Western sanctions, Russia is actively increasing its own arms production and seeking opportunities to supply high-tech equipment circumventing restrictions. As of 2025, 40% of such equipment is imported from Asian countries, while another 60% comes from Western nations.
“Between 2022 and 2025, the volume of foreign direct investment in the Russian economy decreased by 56.6%, to $216 billion. This is the lowest figure since 2009. The total losses to the Russian economy due to the withdrawal of investments exceed $280 billion.”
An additional negative factor for the Russian economy is the freezing of about 300 billion dollars of Russian assets by Western countries following the start of the full-scale invasion. Part of the income from these assets is already being directed to support Ukraine – both for reconstruction and for the procurement of weapons.