BOFIT Forecast for Russia 2025–2027 / 1

While Russian GDP has risen in recent years, much of the growth has been driven by the surge in government spending on the war in Ukraine. We expect government spending to increase further this year, but production is already stretched to capacity, limiting potential for further output gains. We now forecast a slowdown in Russian annual GDP growth to around 2 % this year and about 1 % in 2026 and 2027. Russia’s economic development is subject to exceptionally high risks as long as Russia continues its war in Ukraine. The incessant rise in government spending and the government’s focus on branches that support the war effort makes structural imbalances in the economy worse. Although a full-blown economic crisis in the immediate future is unlikely, failure to address economic disparities could eventually have serious repercussions.

BOFIT will hold a Russia briefing (in Finnish) on the forecast on March 24, 2025, starting at 13.00 EEST. A video upload of the event will be posted on the Bank of Finland’s YouTube channel.

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For further information:

Heli Simola, Senior Economist
tel. +358 9 183 2263, heli.simola(at)bof.fi

Iikka Korhonen, Head of Research
tel. +358 9 183 2272, iikka.korhonen(at)bof.fi