European Commission lowers forecast for Russian GDP growth to 0.8% in 2025, 1.1% in 2026

MOSCOW. Nov 17 (Interfax) - The European Commission forecasts Russia's economy to grow 0.8% in 2025 and 1.1% in 2026, the EC said in a report.

The EC had previously projected Russia's GDP to grow 1.7% and 1.2%, respectively.

EC expects the Russian economy to grow by 1.2% in 2027.

IT estimates GDP grew 4.3% in 2024.

"Government consumption carried over a comparatively low growth momentum from 2024-H2, as military consumption levels off. Even in the face of record-high interest rates, private consumption remained an important driver of growth, in large part thanks to resilient real wage growth, sustained by a continuously tight labor market," the EC said.

High-frequency indicators are pointing towards a weak performance in the second half of 2025. Military expenditure remains high but is plateauing.

In the external sector, the deteriorating global economic environment for Russia, paired with the sanctions regime, is expected to impact exports, while imports benefit from trade diversion and favorable terms of trade.

Private consumption growth in Russia is expected to slow from 5.4% in 2024 to 2.3% in 2025 (previous forecast 1.7%) and 2% (1.9%) in 2026, but will accelerate to 2.1% in 2027. The EC forecasts gross fixed capital formation will slow from 6% in 2024 to 0.2% (0.7%) in 2025 and accelerate to 0.8% (1%) in 2026 and 0.9% in 2027.

The EC forecasts inflation in Russia at 8.9% (9.5%) this year, 4.8% (5.8%) next year and 4.6% in 2027. Last year's inflation was estimated at 8.4%.

The EC expects Russia's public debt to increase from 20.3% of GDP in 2024 to 22.1% (20.8%) of GDP in 2025, 24.2% (22.9%) of GDP in 2026, and 25.6% of GDP in 2027.