IMF Reassesses Russia’s Economic Outlook: From Wartime Growth to Looming Stagnation

The International Monetary Fund (IMF) has revised its forecast for the Russian economy downward, indicating the conclusion of a brief period of growth during wartime and predicting a return to stagnation.

In its July World Economic Outlook Update, the IMF estimates that Russia’s GDP will grow by only 0.9% in 2025, a significant decline from last year’s expansion of 4.1%. This adjustment represents a reduction of 0.6 percentage points from the IMF’s report in April, marking the largest cut among major global economies.

Globally, the economy is projected to expand by 3% this year and by 3.1% in 2026.

Emerging economies are expected to grow at approximately 4% per year, whereas Russia’s economic growth is anticipated to be barely 1% in 2026.

Over the next two years, Russia’s growth rate is expected to be less than half that of the United States, which is forecasted to increase by 3.9%, and will lag significantly behind China (9%) and India (6.4% annually in 2025 and 2026).

The IMF attributes this slowdown to stricter economic policies and declining global oil prices, which have diminished the vital revenue sources that supported Russia’s wartime economy.

The average price of Brent crude is projected to decrease by 13.9% this year, reaching $68.18 per barrel, with further declines anticipated to $64.33 in 2026.

Petya Koeva-Brooks, deputy director of the IMF’s research division, noted that Russia’s performance in the first quarter of 2025 did not meet expectations.

According to the state statistics agency Rosstat, year-on-year growth fell to 1.4%, down from 4.5% in the previous quarter and sharply lower than the 5.4% growth recorded during the same period last year.

On a quarterly basis, the economy contracted for the first time since 2022, with non-defense sectors beginning to decline in February and registering four consecutive months of contraction since then.

By late June, these sectors had decreased by 0.9% year-on-year, according to estimates from the government-affiliated Center for Macroeconomic Analysis and Forecasting.

Senior Russian officials are starting to recognize the economic threats.

At the St. Petersburg Economic Forum in June, Economy Minister Maxim Reshetnikov cautioned that the country was «on the brink of an economic downturn.»

Central Bank Governor Elvira Nabiullina conveyed an even more alarming message, stating that the resources that had supported wartime growth «have truly been depleted.»

Nabiullina highlighted issues such as labor shortages, idle production capacity, and dwindling reserves from the National Wealth Fund, which has reportedly seen its liquid assets decline by two-thirds since the onset of Russia’s full-scale invasion of Ukraine.