The economy of the Russian Federation is facing increasing problems, which are already being acknowledged by the country’s government. The Minister of Economic Development of Russia, Maxim Reshetnikov, reported the emergence of “alarming signs” and a rapid “cooling” of the economy, which is unfolding faster than previously expected. According to the ministry, in July 2025, Russia’s GDP growth slowed to 0.4% year-on-year. In comparison, growth in the second quarter was 1.1%, and for the entire year of 2024, it was 4.3%.
This is reported by Finway
Lowered Forecasts and Budget Deficit
The Russian government has already revised its GDP growth forecast for 2025 downward twice in the past week: first to 1.5%, and then to just 1.2%. The initial forecast anticipated GDP growth of 2.5%.
Against the backdrop of these negative trends, the fiscal situation in the country is also significantly deteriorating. According to the Ministry of Finance of Russia, the federal budget deficit for the first seven months of 2025 reached ₽4.9 trillion, which is 3.4 times higher than the same figure from last year. Budget expenditures during this period increased by 21% to ₽25.19 trillion, while revenues grew by only 3% to ₽20.32 trillion.
Public Statements by Putin and Officials
At the same time, Vladimir Putin, during his speech at the Eastern Economic Forum in Vladivostok, assured that the budget deficit due to the war is not a critical problem for Russia given the low level of state debt.
“The growing budget deficit in Russia due to the war is not a problem considering the low level of state debt.”
In addition, Putin refused to acknowledge the stagnation of the Russian economy, which was previously stated by the head of Sberbank, Herman Gref.
Maxim Oreshkin, Deputy Head of Putin’s Administration, in turn, expressed the opinion that the Western sanctions imposed on Russia allegedly have a positive effect on the country’s economy, as they stimulate the search for new opportunities. He also noted that BRICS countries and the Global South currently play a leading role in world trade, while previous alliances, according to him, are losing their significance.