The debate over whether Russia is\u00a0officially in\u00a0a\u00a0recession has been ongoing for months. While some argue that the country is\u00a0undergoing a\u00a0\u201ctechnical stagnation,\u201d others, including economist Sergey Alexashenko, argue that even a\u00a0marginal 0.1% or\u00a01% growth is\u00a0still indicative of\u00a0stagnation, The Mocow Times writes.<\/p>\n
The Russian economy has essentially split into two sectors: a\u00a0growing military sector and a\u00a0struggling civilian sector. While military spending is\u00a0on\u00a0the rise, supported by\u00a0significant government financing, the civilian industries are struggling. Central Bank policies, including a\u00a0high key interest rate, are further straining non-state sectors.<\/p>\n
The Centre for Macroeconomic Analysis and Short-Term Forecasting (CMAST) reported that civil industries have been stagnant since mid-2023 and are now experiencing a\u00a0sharp decline.<\/p>\n
The decline is\u00a0most evident in\u00a0the real sector, where production and financial stability are deteriorating, according to\u00a0INEF experts. The trend is\u00a0compounded by\u00a0weak investment in\u00a0the second half of\u00a02025, which is\u00a0expected to\u00a0drag the economy further down.<\/p>\n
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CategoryLatest news<\/a>Russia\u2019s Economy Flatlines: Sberbank Warns of\u00a0Near-Zero Growth<\/a><\/p>\n \n Sep 04, 2025 14:33\n <\/p>\n This trend is\u00a0confirmed by\u00a0the Central Bank\u2019s monitoring, which showed a\u00a0sharp decline in\u00a0financial flows in\u00a0July, marking the largest drop since the pandemic, according to\u00a0The Moscow Times.<\/p>\n While exports and consumer demand are also declining, the government\u2019s ability to\u00a0stimulate the economy through high spending is\u00a0limited, according to\u00a0INEF. With low oil prices, a\u00a0strong ruble, and a\u00a0stagnant economy, maintaining high spending rates will require a\u00a0budget deficit of\u00a0over 5\u00a0trillion rubles (60.3$ billion) in\u00a02025.<\/p>\n Any slowdown in\u00a0government spending is\u00a0expected to\u00a0further worsen the economic situation in\u00a0the second half of\u00a0the year.<\/p>\n The Moscow Times concludes that Russia\u2019s economy faces an\u00a0uphill battle in\u00a0the coming months, as\u00a0both the military and civilian sectors show signs of\u00a0strain, and the government\u2019s ability to\u00a0support growth is\u00a0severely constrained.<\/p>\n The forecast for 2025\u2019s growth is\u00a0modest at\u00a0best, with predictions of\u00a0about 1% growth, and a\u00a0potential contraction of\u00a0up\u00a0to\u00a00.3 percentage points in\u00a0GDP due to\u00a0shrinking inventories and lower consumer demand.<\/p>\n Previously, Ukrainian President Volodymyr Zelenskyy said<\/a> that Russia\u2019s war against Ukraine cannot be\u00a0stopped by\u00a0negotiations or\u00a0partial concessions, but only by\u00a0exhausting the economic and military resources that enable\u00a0it.<\/p>\n
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