World Bank: russia’s Economy Is Entering Stagnation

The World Bank predicts a prolonged cooling in the russian economy, which contradicts the kremlin’s optimistic statements about a “soft landing”.  According to the updated forecast, russia’s GDP growth will not exceed 1 % per year until 2028 – de facto a recession, given the persistently high inflation.

In its previous forecast for 2025–2027, the World Bank expected growth of 1.4 %, 1.2 %, and 1.2 %, respectively. Now, the estimates have been lowered to 0.9 %, 0.8 %, and 1 %. Experts see no factors that could prevent economic stagnation: the country is not expected to see an influx of investments – due to the risks of nationalization of private assets –or any significant growth in domestic demand or exports. The labor shortage remains an additional restraining factor.

The increase in the tax burden also has a significant negative effect. Given the current structure of budget expenditures, a large-scale increase in taxes affects consumer demand and investment activity, exacerbating the structural problems of the economy.

At the same time, the gap between sectors in russia is widening: while the defense-industrial complex continues to grow, civilian industries are shrinking. Throughout the current year, output in non-military industries has been declining, and enterprises that account for a third of the real sector’s revenue are under financial stress.

The “unmanaged” nature of the cooling was also acknowledged by Aleksandr Shokhin, the head of the russian union of industrialists and entrepreneurs – the country’s largest business association with Forbes billionaires as members of its board. According to him, the authorities promised a “soft landing” after two years of growth of more than 4 %, but the actual dynamics turned out to be worse: in July 2025, GDP grew by only 0.4 % compared to 2024. “It seems to me that this cooling is neither very soft nor, most importantly, very well managed,” Shokhin said.