Russia: Economic and Political Overview
In this page: Economic Outline | Political Outline
On February 24th 2022, Russia initiated a military conflict on the Ukrainian territory, which profoundly upsets the current political context in both countries and will have substantial political and economic ramifications. For the ongoing updates on the developments of Russia-Ukraine conflict please consult the dedicated pages on BBC News.
The latest specific information on economic sanctions against Russia in response to the conflict in Ukraine is available below:
• What sanctions are being imposed on Russia
• The list of global sanctions on Russia for the war in Ukraine
Russia’s economy stands as one of the world’s most influential, driven largely by its abundant natural resources - especially oil and gas - that power both domestic growth and export earnings. A blend of resource wealth, state control, and reform efforts creates an environment marked by both vast potential and enduring structural challenges. According to Rosstat, the economy grew by 4.1% in 2024, matching the growth rate of 2023, with the previous estimate for that year revised up from 3.6%. The IMF’s figures are more conservative and point to a 3.6% rate for both years. Such growth was propelled by high military spending and capital investment in defence production. Despite Western sanctions, Russia’s economy is now over 6% larger than before the Ukraine offensive, according to the central bank. Nevertheless, officials and analysts project slower economic growth in Russia for 2025, with the central bank forecasting a 1.6% expansion (1.4% as per the IMF), closer to the country’s long-term potential growth rate. The removal of international sanctions in case of a ceasefire with Ukraine may have positive effects on Russia’s economy but the situation remains highly volatile.
Concerning public finances, Russia's budget deficit exceeded RUB 3 trillion for the third consecutive year in 2024, driven by rising war-related spending, according to the finance ministry. The deficit reached RUB 3.49 roubles (USD 34.4 billion), with revenues up 26% to RUB 36.71 trillion and spending rising 24.2% to RUB 40.19 trillion. While the deficit narrowed to 1.7% of GDP from 1.9% in 2023, it remained higher than expected. Excluding oil and gas revenues, the deficit widened to 7.3% of GDP. Spending is set to rise to RUB 41.47 trillion in 2025, with 41% allocated to defence and security, though increased tax revenues are expected to reduce the deficit to 0.5% of GDP (official governmental figures). Government expenditure is expected to be two-thirds higher in 2025 than in 2021, prior to the start of Russia's military campaign. Despite higher deficits, the debt-to-GDP ratio is still relatively low, at around 20% (IMF), and is expected to increase marginally over the forecast horizon. According to the Bank of Russia, the country’s external debt fell by USD 27.5 billion (8.7%) in 2024, reaching USD 290.4 billion by year-end. Consumer prices rose by 9.52% in 2024, up from 7.42% in 2023, marking the fourth-highest inflation rate in 15 years, remaining a key challenge in an overheated economy driven by state military spending. As of early 2025, the central bank has kept its benchmark interest rate at 21%, the highest in two decades, to curb price growth. By the end of November 2024, the ruble had dropped 21% against the U.S. dollar, making it one of the worst-performing emerging market currencies. The exchange rate fell to 110 rubles per dollar, the lowest since 2022. In response, the Russian central bank halted foreign ruble purchases for the rest of the year to stabilize the currency.
Despite a very low unemployment rate – estimated at 2.6% in 2024 - Russia’s long-term structural economic problems were aggravated by war and sanctions, as the labour force decline has been accelerated by mobilization, war casualties and migration. As a consequence, not only military personnel have seen large pay rises, but wages have also increased in sectors like textiles and agriculture. According to the Federal State Statistics Service, Russian companies' wage arrears reached RUB 507.9 million (USD 5.7 million) as of January 1, 2025, up 43.5% year-on-year. Around RUB 394.7 million (USD 4.4 million) stems from unpaid 2024 wages, marking the first rise in overdue salaries since 2015. Overall, Russia is classified as a high-income country by the World Bank, with a GDP per capita estimated at USD 47,298 as of 2024 (IMF).
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 2,009.96 | 2,184.32 | 2,195.71 | 2,249.27 | 2,304.56 |
| GDP (Constant Prices, Annual % Change) | 3.6 | 3.6 | 1.4 | 1.2 | 1.2 |
| GDP per Capita (USD) | 13,739 | 14,953 | 15,077 | 15,495 | 15,930 |
| General Government Balance (in % of GDP) | -2.5 | -2.4 | -0.8 | -0.7 | -0.7 |
| General Government Gross Debt (in % of GDP) | 19.5 | 19.9 | 20.4 | 21.4 | 22.5 |
| Inflation Rate (%) | 5.9 | 7.9 | 5.9 | 4.0 | 4.0 |
| Unemployment Rate (% of the Labour Force) | 3.2 | 2.6 | 3.0 | 3.6 | 4.0 |
| Current Account (billions USD) | 50.13 | 58.02 | 56.65 | 55.24 | 53.52 |
| Current Account (in % of GDP) | 2.5 | 2.7 | 2.6 | 2.5 | 2.3 |
Source: IMF – World Economic Outlook Database, Latest data available.
Note : (E) Estimated data
Agriculture contributes 3.3% of the national GDP and employs around 6% of the total working population. Despite its large area, Russia has relatively little arable land due to unfavourable climatic conditions. The country nevertheless owns 10% of the world's agricultural land. Wheat is the flagship crop—making Russia the world’s largest exporter of wheat—while barley, oats, and rye are also produced in significant quantities. In addition, oilseed crops such as sunflowers (used mainly for oil production), rapeseed, and soybeans play an important role. Other notable cultivations include fodder crops (vital for feeding livestock), as well as industrial crops like sugar beet and various vegetables and root crops (for example, potatoes) grown in more favourable regions. Russia's grain exports hit a record high of 72 million tonnes in 2024, up from 68.6 million tonnes in 2023, according to the Russian Agricultural Export Development Centre; while the Ministry of Agriculture estimated a 1.8% y-o-y increase in total output in the first ten months of 2024.
Industry accounts for 30.6% of Russia's GDP and employs 26% of the workforce. The Russian secondary sector is characterized by its diverse range of industries and resources. Key compartments include energy, with Russia being one of the world's leading producers of oil, natural gas, and coal. Additionally, the country has a robust manufacturing sector, particularly in heavy industries such as metallurgy, machinery, and aerospace. The automotive industry also holds a significant position within Russian industrial production. Emerging sectors include technology and innovation, with a focus on sectors such as biotechnology and nanotechnology. Russia's industrial sector is undergoing modernization efforts aimed at enhancing efficiency, productivity, and competitiveness in the global market. Russia’s industrial production growth stood at 4.6% y-o-y in 2024 (data Rosstat).
The service sector employs 68% of the population and generates 56.9% of the GDP. Dominant sectors include finance and banking, with Moscow serving as a prominent financial centre in the region. Retail and wholesale trade also play significant roles, as does the tourism industry (which in recent years was hindered by the COVID-19 pandemic and the conflict with Ukraine). Emerging sectors include information technology (IT) and digital services, as Russia seeks to capitalize on its skilled workforce and technological capabilities. Additionally, there is increasing attention on healthcare and education services as the government aims to improve access and quality in these areas.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 5.7 | 26.4 | 67.9 |
| Value Added (in % of GDP) | 3.3 | 30.6 | 56.9 |
| Value Added (Annual % Change) | 0.1 | 3.6 | 4.2 |
Source: World Bank, Latest data available.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2021-2025
See the country risk analysis provided by Coface.
With 87.3% of the vote and a record turnout of 77.5%, Vladimir Putin won a second term in the March 2024 presidential elections, guaranteeing his position until at least 2030. The election's fairness was contested, nevertheless, as official media pushed narratives in favour of the administration while suppressing critics. Notably, Alexei Navalny died in a Siberian prison colony under mysterious circumstances, and Mikhail Khodorkovsky was imprisoned. Putin may be able to stay in office until 2036 after constitutional amendments eliminated term restrictions and legal reform in 2008 increased presidential tenure to six years. He kept Prime Minister Mikhail Mishustin in place while restructuring the Russian cabinet, with six new appointees out of the 21 ministers. Andrei Belousov's nomination as defence minister was the biggest shift. Belousov, the former first deputy prime minister in charge of Russia's socioeconomic development, was seen as a calculated move that demonstrated Putin's sustained emphasis on keeping the economy operating at war level in the face of continuous security issues and international tensions. Putin's next term places a strong emphasis on raising R&D expenditures, increasing the birth rate, and maintaining nationalist policies. Economic self-sufficiency is currently given priority, with the goal of bringing imports down to 17% of GDP and achieving technical independence in areas like artificial intelligence, space, and energy. In the face of shifting global alliances, Russia stepped up its efforts in 2024 to deepen its connections with China, India, North Korea, and other BRICS and non-aligned nations by extending trade, security, and technology cooperation. However, there were a number of setbacks, such as the overthrow of the Syrian government of Bashar al-Assad, which Russia supported, and the invasion of the Kursk region by Ukraine. Since Donald Trump's election as President of the United States, there have been indications of potential negotiations to reach an armistice in Ukraine, as Trump has indicated a desire to negotiate directly with Russian President Vladimir Putin to achieve a significant resolution to the conflict.
- United Russia: centrist, remains the largest and seemingly most popular party in Russia, self-declared focus on 'Russian conservatism'
- Communist Party of the Russian Federation (CPRF): left-wing, seeks to establish modern socialism
- A Just Russia (CP): centre-left, ally of United Russia
- Liberal Democratic Party of Russia (LDPR): far-right, opposes communism and capitalism, self-described as centrist, an extreme right nationalist political party
- New People: liberal, centrist.
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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