Russia’s economy has taken a tumble in a fresh blow to Vladimir Putin, according to Moscow’s official statistics agency. Rosstat reports that growth in Russia’s GDP fell dramatically in the first quarter of this year as the country grapples with a growing economic crisis.
Official estimates show Russia’s GDP grew by 1.4% year-on-year in the first quarter of 2025 — three times less than the final quarter of 2024 (4.5%), The Moscow Times reports. This represents a brutal hit of around £55 billion and is also nearly four times less than the same period last year (5.4%). Businesses and consumers across Russia — which has been slapped with heavy Western sanctions following the war in Ukraine — are reeling under the effects of spiralling inflation and high interest rates.
Egor Susin, managing director at Gazprombank Private Banking in Russia, said the new figures indicate a “sharp slowdown in the economy”.
There are also signs this quarter could be worse news for the Russian economy.
Compared to the previous quarter, the economy has already contracted by 0.4% — the first decline since 2022, according to Raiffeisenbank.
Russia’s oil and gas industry are important to the economy but are showing cause for concern for the Kremlin.
Experts say decreasing oil prices are having an impact, while Russia’s cheap oil supply is also reportedly running out.
Moscow’s oil and gas revenue has been seen falling by a third this month compared to a year earlier amid weaker oil prices and a stronger rouble, according to Reuters calculations.
The news agency said the revenue has fallen to its lowest level in nearly two years.
The Kremlin’s treasury deficit for the first four months exceeded last year’s almost threshold, according to The Moscow Times.
Rosstat said Russia had a GDP of 201.2 trillion roubles (£1.87 trillion) in 2024.
It comes after a new report suggests Russia’s claims of economic strength are “misleading”, with the country in fact spiralling towards a banking crisis.
Moscow has doggedly insisted that its economy has only experienced a minor annual shortfall of 2% since the war in Ukraine began, despite pouring huge amounts of money into its military budget.
Torbjorn Becker, who led the Stockholm Institute of Transition Economics (SITE)’s report into the country’s economy, said increased government spending as part of the “war economy” had kept Russia afloat in the short-term, but “opaque financing, distortionary resource allocation and shrinking fiscal buffers” were now making it unsustainable.
The UK economy grew at the fastest rate in over a year in the first quarter of 2025.
The Office for Nationals Statistics said GDP increased by 0.7% between January and March.
