CBR estimates Russia's GDP growth at 1.8% in Q2, expects 1.6% increase in Q3

MOSCOW. Aug 6 (Interfax) - Russia's GDP growth in Q2 2025 amounted to 1.8% year-on-year, according to Central Bank of Russia estimates, following a 1.4% increase in Q1 2025.

The corresponding estimate is included in the commentary to the Central Bank's medium-term forecast published on Wednesday. The forecast was released on July 25.

The regulator expects growth of 1.6% YoY in Q3 2025, with a further slowdown to 0.0%-1.0% in Q4 2025.

"GDP grew 1.4% year-on-year in Q1, which is lower than the Central Bank's April 2025 forecast (2.0%). Actual data for Q1 indicate a faster-than-expected cooling of domestic demand compared to April expectations. However, the dynamics of domestic demand components in Q1 were uneven: the slowdown in household and government consumption growth was more pronounced than expected in April, occurring alongside stronger-than-anticipated growth in gross fixed capital formation. Changes in inventories of material working capital and net exports made a negative contribution to GDP dynamics in Q1," the document said.

"According to the Central Bank's evaluation, the positive output gap narrowed in both Q1 and Q2, which was reflected in slower price growth. Operational data indicate GDP growth of 1.8% in Q2 compared to the same period last year, close to the April forecast (1.9%). Economic activity will remain subdued in Q3, with the midpoint of the forecast range corresponding to 1.6% year-on-year GDP growth. In Q4, including due to the high base effect from Q4 2024, when there was a sharp temporary surge in output in certain sectors of the economy, the annual GDP growth rate is expected to be in the range of 0.0%-1.0%," the CBR said regarding its quarterly GDP growth forecast. The Economic Development Ministry and Rosstat have not yet provided their estimates for Q2 GDP growth.

As reported, in July the CBR maintained its April forecast for Russia's GDP growth in 2025 at 1.0%-2.0%.

"In 2026, moderate dynamics of consumer and investment demand under the influence of the effects of tight monetary policy pursued in 2025 will lead to a slowdown in GDP growth to 0.5%-1.5%. The contribution of consumer demand to GDP dynamics in 2026-2028 will increase as interest rates decline. In the baseline scenario, the Russian economy is expected to reach potential growth rates of 1.5%-2.5% in 2027, which will be maintained thereafter," the CBR said regarding its forecast for 2026 and subsequent years.

As reported, the Economic Development Ministry in its baseline scenario (from April) forecasts Russia's GDP growth at 2.5% in 2025 and 2.4% in 2026.

Analysts polled by Interfax in early July forecast GDP growth of 1.4% in 2025 and 1.7% in 2026.