Suomen Pankki

BOFIT Forecast for Russia 2024–2026: Russian economic growth set to decelerate


The Bank of Finland Institute for Emerging Economies (BOFIT) expects Russian economic growth to begin slowing this year. While 2024 growth should be around 2 %, annual growth of around 1 % is expected for 2025 and 2026. Short-sighted economic policies and the course of the war create significant uncertainty to the forecast.  

Last year Russia’s economy outperformed the expectations of most forecasters. In particular, growth in capital stock and private consumption accelerated faster than expected. The significant leap in the capital stock reflected higher investment in defence industries and companies stocking up for uncertain times ahead. Inventory growth has been driven by ever-intensifying component shortages.

Following the post-invasion drop in 2022, private consumption, lifted by hefty wage increases and a low basis reference, recovered rapidly last year. The potential for higher on-year growth this year is limited above all by capacity constraints.

“Russia’s economy will not only grow more slowly in the years ahead but will also be increasingly driven by the state. Growth in the next few years is limited by Russia’s low potential long-term growth potential, which has been further reduced since Russia’s invasion of Ukraine,” reports BOFIT senior economist Sinikka Parviainen.

Growth boosted by war spending

Russian economic growth will likely slow this year. Even if quarterly growth were to stall completely for all of 2024, the rapid growth in the second half of 2023 would still be sufficient to lift the pace of on-year growth this year to around 2 %. In the absence of major surprises, the Russian economy in 2025 and 2026 should grow at roughly 1 % a year, which in proximity to its long-term potential growth rate.

Soaring public spending should be the largest driver of growth throughout the forecast period. Some of Russia’s robust military spending will be channelled to fixed investment.

“The issue with wartime fixed investment,” notes Parviainen, “is that it often does little to increase the stock of productive capital or raise productivity. In fact, a significant chunk of wartime investment goods are consumed or destroyed over a short time span.”

Russia’s second engine of growth, private consumption, will be sustained by full employment. Many branches already face severe labour shortages, making further wage hikes almost inevitable. On the other hand, it is unlikely that Russia’s export markets will expand much in the years ahead. Imports, too, are limited by a range of factors, including Western sanctions.

Our latest forecast is again subject to a high uncertainty. The unavailability of critical statistical data is only one of the many factors that make analysis of current conditions challenging. Moreover, a change in the course of the war or blowback from Russia’s current short-sighted economic policies could have profound impacts on future trends in the Russian economy.

The forecast document is posted at

For further information:



The Bank of Finland is the national monetary authority and central bank of Finland. At the same time, it is also a part of the Eurosystem, which is responsible for monetary policy and other central bank tasks in the euro area and administers use of the world’s second largest currency – the euro.

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