Economic growth ebbs in the third quarter of 2025

GDP growth hits a 10-quarter low in Q3: According to a preliminary estimate, Russia's GDP grew 0.6% on a year-on-year basis in Q3, following 1.1% growth in the prior quarter and marking the weakest result since Q1 2023.

War fatigue and high interest rates hamper economic growth: The disappointing Q3 reading was likely the result of several shocks. High interest rates—deemed necessary by the Central Bank to reduce inflation—likely weighed on business investment and consumer borrowing. At the same time, lower oil prices will have strained public coffers, as fossil fuel revenues account for nearly one-fifth of government income. Moreover, last month, the U.S. introduced some of its toughest sanctions yet on Russia’s energy sector—targeting the nation’s two largest oil producers, Rosneft and Lukoil—in an effort to pressure Moscow to end the war in Ukraine. Finally, Ukraine's attacks on Russia’s energy grid will have weighed on economic activity more broadly.

Economy to contract in Q4: Our Consensus is for GDP to contract year on year in the last quarter of 2025. High interest rates and inflation, coupled with labor shortages, are set to weigh on household budgets. Moreover, international sanctions plus low oil prices should hit export revenues and government spending in turn. In 2026 as a whole, our panelists expect economic growth to remain close to 2025’s three-year low and below the pre-pandemic 10-year average of 1.9%. Key factors to track include oil prices, sanctions on oil re-exports and peace negotiations.

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