World Bank downgrades forecast for Russia's GDP growth to 0.9% in 2025 and to 0.8% in 2026

MOSCOW. Oct 7 (Interfax) - The World Bank now forecasts growth in Russia's GDP to decelerate to 0.9% in 2025 and to 0.8% in 2026, the bank said in a report.

The bank's June forecast envisaged growth of 1.4% and 1.2%, respectively.

The bank has lowered its forecast to growth of 1% in 2027 from 1.2%.

The World Bank estimates that Russia's economy grew 4.3% in 2024.

"In Russia, growth is set to remain below 1%, constrained by tighter policies, waning fiscal support, weaker exports, and distortions from prolonged defense spending and a heavy reliance on state-led lending, which have fueled labor shortages and rising credit risks," the World Bank said.

"Activity in non-defense sectors has been squeezed by high borrowing costs, shrinking consumer credit, and worker shortages," it said.

Investment is expected to decline slightly in Russia because of tighter policies, high borrowing costs, and the softening economic outlook, it said.

"The growth of corporate credit has already moderated sharply, and mounting credit risks further constrain banks' profitability and capacity to extend new lending," the World Bank said.

Economic growth in Europe and Central Asia (ECA) excluding Russia, which accounts for about 40% of the region's output, is likely to remain little changed at about 3.3% this year and next, rising to 2.7% in 2027.