The Central Bank of Russia believes that after three quarters of slowing growth, the country’s economy could slip into a contraction toward the end of the year.

According to the assessment of the Russian Ministry of Economic Development, GDP grew by 0.6% year-on-year in July–September after rising 1.1% in the second quarter, 1.4% in the first, and 4.5% in the fourth quarter of last year.

Because of this high base, the Central Bank of Russia lowered its forecast and in the fourth quarter expects year-on-year GDP dynamics to range from minus 0.5% to plus 0.5%. In July, the bank did not anticipate a decline and projected growth in October–December up to 1%.

A year-on-year decline in quarterly terms will be Russia’s first since January–March 2023, when the country’s economy fell by 1.6%, but after that it only operated in positive territory.

It is noted that GDP growth in the third quarter of 2025 turned out to be much lower than the Central Bank expected – in August the bank forecast 1.6% year-on-year.

«Overheating of the economy» is gradually easing, the Central Bank said during the discussion of the policy rate on October 24, acknowledging that the overheating may be larger than it seemed and will end later than previously expected.

– Central Bank

The majority of participants in the discussion believe that this could happen in the first half of 2026. Therefore, cooling the economy with high rates will have to continue longer, the Central Bank said.

Industries related to the military-industrial complex are growing, while the rest have long been in the red.

Thus, according to the Kremlin-adjacent Analytical Center for Macro-Economic Analysis and Short-Term Forecasting, in civilian sectors of industry production has been steadily falling since the start of the year; during this time, production of 73% of the 129 most important types of products has decreased, and the financial position of companies is deteriorating rapidly.

Next year, companies that account for 32.5% of revenue will face a high risk of losing financial stability.

It is also noted that business activity in Russia had been decreasing for four months and only in October did it rise slightly, due to unexpected activity in the services sector.

According to government sources, Russian authorities are preparing citizens for further deterioration in living standards amid a record budget deficit that in 2025 will reach 5.74 trillion rubles.