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 just 1.0% in 2025, down sharply from 4.9% in 2024, as the wartime stimulus faded. The IMF puts 2025 growth at the same 1.0% rate. What growth there was remained concentrated in 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. Officials and analysts project similarly weak growth for 2026, with the IMF forecasting a 1.1% expansion, close 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 fourth consecutive year in 2025, driven by rising war-related spending and falling energy receipts, according to the finance ministry. The deficit reached RUB 5.65 trillion (USD 72.1 billion), with revenues up 1.6% to RUB 37.28 trillion and spending rising 6.8% to RUB 42.93 trillion. The deficit widened to around 2.6% of GDP from 1.7% in 2024, well beyond the original plan. Oil and gas revenues alone fell 23.8% to RUB 8.48 trillion. Spending was originally set at RUB 41.47 trillion for 2025, with 41% allocated to defence and security, and the deficit was meant to fall to 0.5% of GDP; in the event spending overshot and the deficit came in five times that (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 16% at the end of 2025 (finance ministry), and is expected to increase marginally over the forecast horizon. According to the Bank of Russia, the country’s external debt rose by USD 10.5 billion (2.1%) over the first half of 2026, reaching USD 313.3 billion as of 30 June. Consumer prices rose by 5.59% in 2025, down from 9.52% in 2024, a sharper slowdown than either the central bank or the market had expected, though prices remain a key challenge in an economy driven by state military spending. As of mid-2026, the central bank has cut its benchmark interest rate to 14%, down from a peak of 21%, as price growth has eased. By September 2026, the ruble had recovered to around 84 per U.S. dollar, making it one of the better-performing emerging market currencies. The exchange rate had fallen to 110 rubles per dollar in November 2024, the lowest since 2022. High interest rates and constrained imports have since underpinned the currency.

Despite a very low unemployment rate – estimated at 2.1% in 2025 - 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 2.879 billion (USD 40.6 million) in April 2026, up 94.3% year-on-year. Arrears have risen roughly sixfold since the start of 2025, with some 19,000 workers affected by early May. Overall, Russia is classified as a high-income country by the World Bank, with a GDP per capita (PPP) estimated at USD 49,568 as of 2025 (World Bank).

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