In the second quarter of 2025, the economy of the Russian Federation virtually halted its growth, entering a state of so-called “technical stagnation.” Experts point out that economic activity sharply declined in July and August, and the country is approaching zero growth rates.
This is reported by Finway
“The second quarter can essentially be viewed as technical stagnation. July and August show quite clear symptoms that we are nearing zero marks,” he said.
Geopolitical Risks and Monetary Policy
Among the main causes of stagnation are the complex geopolitical situation, falling global commodity prices, and significant fluctuations in the ruble’s exchange rate, which have negatively impacted business activity in the country. Additionally, the current key rate of the Central Bank of Russia, which stands at 14%, has a substantial effect. Economists believe that the high level of interest rates significantly restrains the development of lending and investment activity.
Experts suggest that to stimulate economic growth, the rate should be lowered below 12%; otherwise, the risks of recession will increase. Currently, the real interest rate in Russia is one of the highest in the world, limiting access for businesses and the population to credit resources.
Forecasts for Development and the Impact of Sanctions
It is expected that the banks’ credit portfolio will begin to recover only in the second half of 2025, and only if monetary policy is softened by at least 200 basis points. Otherwise, the high cost of borrowing will continue to hinder investment activity and consumer demand.
Analysts also emphasize that the Russian economy remains under significant pressure from international sanctions, uncertainty in global markets, and rising business costs. According to them, if financial policy does not change, Russia risks remaining in a state of stagnation for a long time.
A similar assessment is provided by the International Monetary Fund. According to its forecasts, after two years of military growth, the Russian economy is returning to stagnation: in 2025, GDP growth will slow to 0.9%, and in 2026 to 1.0%. For comparison, this figure was 4.1% in 2024.