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3w ago

Russia’s Economy Teeters on Recession After PMI Contracts

Exhausted labor reserves threaten to undermine wartime spending, prompting calls for a new growth framework.

Russia's President Vladimir Putin (R) and Russian Sberbank CEO German Gref attend Sberbank conference on artificial intelligence in Moscow on December 11, 2024.
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Overview

  • Russia’s manufacturing PMI fell to 47.5 in June, marking the first contraction since 2022.
  • GDP expansion slowed to 1.4 percent year-on-year in Q1 2025, the weakest pace in two years.
  • The Central Bank cut its key rate to 20 percent in June to rein in inflation, which stands at 9.9 percent.
  • Economy minister Maksim Reshetnikov and Central Bank head Elvira Nabiullina warned at the St. Petersburg forum that free labor resources are depleted and recession risks are rising.
  • Defense and security spending remains at 13.1 trillion rubles (6.3 percent of GDP) even as bad loans could reach 3.7 trillion rubles, raising financial stability concerns.