Volkswacht Bodensee - Russia's economic growth slowed to 1% in 2025: Putin

Huge spending on its army fighting in Ukraine has initially spurred growth and helped Moscow buck predictions of economic collapse after it launched its offensive in 2022.

But the ramped-up spending pushed up inflation, weighing on real growth, while businesses have railed against high borrowing costs introduced to rein in the rise in prices.

"Russia's GDP grew by one percent last year. This is lower than the dynamics observed earlier, as we are well aware: in 2023 and 2024, growth was 4.1 percent and 4.3 percent, respectively," Putin told a government meeting.

"But we also know that this slowdown was not simply expected, one could even say it was man-made: it was connected with targeted measures to reduce inflation," Putin added.

He said the inflation "had been reduced to 5.6 percent" last year, compared to 9.5 percent a year prior.

In December, Russia's central bank cut its benchmark interest rate to 16 percent as inflation showed signs of slowing down.

But state statistics agency Rosstat said last year it expected annual inflation to ease to the four-percent target only in 2027.

"The task is clear: we need to restore the growth rate of the domestic economy, improve the business climate, and increase investment activity with a focus on increasing labour productivity," Putin said on Tuesday.

Earlier this month, Moscow published budget information indicating that its oil and gas revenues -- crucial for its state coffers -- dropped to a five-year low.

The country's oil and gas sectors and many of its businesses have been subject to numerous European and US sanctions since Moscow sent its troops into Ukraine in 2022.

M.Schneider--VB