Russian economists and officials foresee a hard struggle in 2025

Russian officials and business leaders forecast lower-than-expected growth for 2025.

Russia’s economy looks to be in for a bumpy ride next year.

Officials and business leaders shared pessimistic economic outlooks for 2025 at the Russian Economic Forum, held this week in Chelyabinsk, in central Russia.

Some predicted lower-than-expected growth and investment delays, blaming interest-rate hikes from the Central Bank of Russia and a lack of state funding.

Andrei Klepach, chief economist at the state-run development entity VEB.RF, predicted that economic growth would fall from an estimated 2.5% to around 2% in 2025. Those figures represented a best-case scenario.

He also downgraded Russia’s fixed capital investment growth from 1.9% to 1%, blaming the central bank’s key rate.

The central bank hiked its rate in late October from 19% to a record-high of 21%, citing the need to tame inflation.

Alexander Shokhin, the president of the Russian Union of Industrialists and Entrepreneurs, said high interest rates were forcing companies to delay launching investments until after 2025.

Shokhin also said a growing number of companies were finding it harder to access funds and called on Russia to step up support measures, including preferential loans at fixed rates.

In August, Russian Prime Minister Mikhail Mishustin said that the state had allocated almost 2.5 billion rubles, some $25.6 million, to preferential loans for companies. Some, he said, would benefit from a subsidized interest rate of 1% to 5%.

Speaking at the economic forum Friday, Russia’s Deputy Prime Minister Alexander Novak said high interest rates had slowed down investment activity from 10% in the first half of the year to an expected 7.8% for the full year.

“We can see a certain fall in investment activity amid the high key rate,” he said.

Since the start of its full-scale invasion of Ukraine in 2022, Russia has repeatedly hiked its defense budget to sustain its military, while wrestling with Western sanctions.

Inflation has soared, prompting the rate hikes that were a cause for complaint at the economic forum.

In a report released Wednesday, the Central Bank of Russia said it could again hike its key rate when it next meets in December.

Speaking on the sidelines of the Russian Economic Forum on Thursday, Kirill Tremasov, an advisor to the central bank’s governor, told the Russian outlet Interfax that he expects an increase of at least one percentage point.

“One percentage point is the lowest possible step right now,” he said.