Key Facts
• Russia’s GDP grew by 1.1% in Q2 2025, showing slowing growth.
• Inflation in July 2025 reached 8.8% year-on-year, with food prices up 10.8%.
• Pensioner Lyudmila faces rising costs: utilities increased by 1,000 rubles in a year.
• High interest rates reduced consumption and investment; housing sales fell 26% in H1 2025.
• Car sales dropped 28% year-on-year; manufacturing output declined due to rising costs.
• Major automakers like GAZ and Kamaz reduced workweeks to four days starting August.
• Some companies halted bonuses and temporarily laid off employees.
• Labor shortages persist as military and defense industries prioritize hiring.
• President Putin emphasized inflation control and economic measures but offered no specifics.
Summary
The Russian economy, once buoyed by military-related demand, is now facing challenges from prolonged inflation and slowing growth. GDP growth in Q2 2025 was 1.1%, while inflation in July reached 8.8%, with food prices rising 10.8%. Citizens like pensioner Lyudmila struggle with rising costs, including higher utility bills. High interest rates have curbed consumption and investment, leading to a 26% drop in housing sales and a 28% decline in car sales in the first half of 2025. Manufacturing output has also decreased, with companies like GAZ and Kamaz reducing workweeks. Labor shortages persist as military and defense sectors prioritize hiring. Despite these issues, President Putin has called for measures to stabilize the economy but has yet to announce concrete plans.
