Central Bank maintains Russian GDP growth forecast of 1.0-2.0% for 2025, 0.5-1.5% for 2026

MOSCOW. April 25 (Interfax) - The Central Bank of Russia has maintained its forecast for Russian GDP growth in 2025 at 1.0-2.0% in its updated medium-term forecast, published following the meeting of the board of directors.

The forecasts for Russian GDP growth in 2026 and 2027 are also unchanged from the previous forecasts in February at 0.5-1.5% and 1.5-2.5%, respectively.

The Central Bank said that according to high-frequency data, the economy had begun to gradually return to a balanced growth path, but the upward deviation from the path remained significant.

It said high-frequency data indicated that growth in economic activity slowed in Q1 2025 compared to Q4 2024.

"Domestic demand growth is still significantly outstripping the capabilities to expand the supply of goods and services. Nevertheless, according to high-frequency data, the economy began to gradually return to a balanced growth path," the Central Bank said.

"The upward deviation of the Russian economy from a balanced growth path is still significant. High domestic demand is backed up by rising household incomes and budget expenditures. However, high-frequency data and surveys of businesses indicate that growth in economic activity slowed in Q1 2025 compared to Q4 2024," it said.

The Central Bank reiterated that the labor market remained tight. "The labor market remains tight so far. Unemployment is at its record lows. However, according to surveys, the share of enterprises experiencing labor shortages is gradually declining in many regions. In addition, labor demand in certain industries has been decreasing with a reallocation of employees across industries," it said.

"Wage increases remain high and continue to outpace labor productivity growth. Nevertheless, according to surveys, companies are planning more moderate wage indexation in 2025 compared to 2023-2024," the Central Bank said.

The Russian Economic Development Ministry this week submitted its draft scenario for the forecast of socio-economic development for 2025-2028 to the government, in which it give a more optimistic view of the Russian economy.

In its baseline scenario, the Econ Ministry forecasts Russian GDP growth in 2025 at 2.5%, as in the September forecast. The ministry lowered its forecast for Russian GDP growth in 2026 slightly to 2.4%, from 2.6% in September. The ministry maintained its forecast for Russian economic growth in 2027 at 2.8%, and expects growth of 3.0% in 2028.

Analysts polled by Interfax in early April predict Russian GDP growth in 2025 at 1.6% and in 2026 at 1.7%.