Economic Outline

Economic Indicators

On February 24th 2022, Russia initiated a military conflict on the Ukrainian territory, which profoundly upsets the current political context in both countries and will have substantial political and economic ramifications. For the ongoing updates on the developments of Russia-Ukraine conflict please consult the dedicated pages on BBC News.

The latest specific information on economic sanctions against Russia in response to the conflict in Ukraine is available below:
•    What sanctions are being imposed on Russia
•    The list of global sanctions on Russia for the war in Ukraine

Russia’s economy stands as one of the world’s most influential, driven largely by its abundant natural resources - especially oil and gas - that power both domestic growth and export earnings. A blend of resource wealth, state control, and reform efforts creates an environment marked by both vast potential and enduring structural challenges. According to Rosstat, the economy grew by 4.1% in 2024, matching the growth rate of 2023, with the previous estimate for that year revised up from 3.6%. The IMF’s figures are more conservative and point to a 3.6% rate for both years. Such growth was propelled by high military spending and capital investment in defence production. Despite Western sanctions, Russia’s economy is now over 6% larger than before the Ukraine offensive, according to the central bank. Nevertheless, officials and analysts project slower economic growth in Russia for 2025, with the central bank forecasting a 1.6% expansion (1.4% as per the IMF), closer to the country’s long-term potential growth rate. The removal of international sanctions in case of a ceasefire with Ukraine may have positive effects on Russia’s economy but the situation remains highly volatile.

Concerning public finances, Russia's budget deficit exceeded RUB 3 trillion for the third consecutive year in 2024, driven by rising war-related spending, according to the finance ministry. The deficit reached RUB 3.49 roubles (USD 34.4 billion), with revenues up 26% to RUB 36.71 trillion and spending rising 24.2% to RUB 40.19 trillion. While the deficit narrowed to 1.7% of GDP from 1.9% in 2023, it remained higher than expected. Excluding oil and gas revenues, the deficit widened to 7.3% of GDP. Spending is set to rise to RUB 41.47 trillion in 2025, with 41% allocated to defence and security, though increased tax revenues are expected to reduce the deficit to 0.5% of GDP (official governmental figures). Government expenditure is expected to be two-thirds higher in 2025 than in 2021, prior to the start of Russia's military campaign. Despite higher deficits, the debt-to-GDP ratio is still relatively low, at around 20% (IMF), and is expected to increase marginally over the forecast horizon. According to the Bank of Russia, the country’s external debt fell by USD 27.5 billion (8.7%) in 2024, reaching USD 290.4 billion by year-end. Consumer prices rose by 9.52% in 2024, up from 7.42% in 2023, marking the fourth-highest inflation rate in 15 years, remaining a key challenge in an overheated economy driven by state military spending. As of early 2025, the central bank has kept its benchmark interest rate at 21%, the highest in two decades, to curb price growth. By the end of November 2024, the ruble had dropped 21% against the U.S. dollar, making it one of the worst-performing emerging market currencies. The exchange rate fell to 110 rubles per dollar, the lowest since 2022. In response, the Russian central bank halted foreign ruble purchases for the rest of the year to stabilize the currency.

Despite a very low unemployment rate – estimated at 2.6% in 2024 - Russia’s long-term structural economic problems were aggravated by war and sanctions, as the labour force decline has been accelerated by mobilization, war casualties and migration. As a consequence, not only military personnel have seen large pay rises, but wages have also increased in sectors like textiles and agriculture. According to the Federal State Statistics Service, Russian companies' wage arrears reached RUB 507.9 million (USD 5.7 million) as of January 1, 2025, up 43.5% year-on-year. Around RUB 394.7 million (USD 4.4 million) stems from unpaid 2024 wages, marking the first rise in overdue salaries since 2015. Overall, Russia is classified as a high-income country by the World Bank, with a GDP per capita estimated at USD 47,298 as of 2024 (IMF).

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