The ministry's estimate shows GDP expanded 0.6% year-on-year in July-September, down from 1.1% in the second quarter, 1.4% in the first and 4.5% in the fourth quarter of 2024.
“As a result, Russia's economy added just 1% over the first nine months — four times less than the 4.3% growth recorded in the same period last year,” the report said. “Industrial growth slowed 11-fold to 0.5% from 5.6% a year earlier, while key civilian sectors turned negative.”
According to the Economy Ministry, food production fell 0.2% year-on-year in the third quarter, clothing and footwear dropped 2.3%, and furniture declined 2.7%. Oil refining lost 4.5% of output after Ukrainian drone strikes. Metallurgy entered recession for the first time since 2022, with production down 3.3%.
"Tens of trillions of rubles invested in military production accelerated Russia's GDP to rates unseen since the early 2010s," the report said, quoting Alexander Prokopenko, a scholar at the Carnegie Russia Eurasia Center in Berlin. "But now production capacity and labor resources are exhausted."
Economic growth effectively stalled in mid-2024, and Russia's GDP is now roughly at the same level as 1.5 years ago, experts at the Russian Academy of Sciences' Institute of Economic Forecasting calculated.
Russian businesses' profits fell 8.3%, or 1.6 trillion rubles ($19.9 billion), in January-August, according to Rosstat.
"As economic growth slows and revenues shrink, Moscow can no longer ramp up fiscal stimulus and is instead imposing austerity measures that threaten to further choke the civilian economy," said Alexander Kolyandr, a senior fellow at the Center for European Policy Analysis.
To balance the budget, the government will raise the VAT to 22% next year and prepare a radical tax reform for small businesses that will strip hundreds of thousands of entrepreneurs of low rates, The Moscow Times reported.
"Conditions are being created where economic resources may not suffice to satisfy geopolitical appetites," the report said, quoting economist Yevgeny Nadorshin. "And as we have seen in 2025, it underdelivers expected taxes to the budget — not deliberately, but because it cannot anymore."
He expects Russia's GDP to fall 2% next year.
As previously reported, German Gref, head of Russia's largest bank Sberbank and longtime ally of dictator Vladimir Putin, believes Russia needs to attract millions of skilled migrants to support the economy and achieve growth rates of at least 3%.