Russian government records sharp economic slowdown

Russia’s economic growth has slowed drastically in the first quarter of 2025.

Source: The Moscow Times, citing Russia’s Ministry of Economic Development

Details: Between January and March, GDP grew by just 1.7% — 2.6 times less than in the previous quarter (4.5%).

Industrial growth fell more than fivefold, from 5.7% to 1.1%, while wholesale trade shrank for the first time since the winter of 2023, contracting by 2.1% over the quarter.

The decline in mineral extraction accelerated fourfold — from 0.9% at the end of last year to 3.7% — and growth in the non-resource sector of industry slowed by half, dropping to 4.7% in January–March from 10.7% in October–December.

Volkan Sezgin, an economist at Continuum Economics, said the quarterly result was the worst for Russia’s economy since January–March 2023. He attributed the downturn to the Central Bank’s tightening policies, ongoing sanctions, supply chain disruptions, and high inflation.

Experts from the Centre for Macroeconomic Analysis and Short-Term Forecasting (CMASF), a think tank with ties to the Russian government, said production outside the military sector has already entered a recession. They estimate that in Q1, the output of civilian goods declined by an average of 0.8% per month (seasonally adjusted), including a 1.1% drop in March.

The downturn has affected civil mechanical engineering, the production of electrical equipment, construction materials, and ferrous metallurgy. Food production has also seen its sharpest decline since the early months of the war — falling by 0.7% per month in the first quarter, according to CMASF.

Background: Russian authorities are preparing to sharply increase gas, electricity and other utility tariffs for citizens.

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