IMF sees Russia’s wartime economy slowing after two strong years

• The IMF has downgraded Russia's 2025 growth forecast due to policy tightening and lower oil prices.
• Russia's economy faces a slowdown after defying sanctions and a military spending boom.
• President Donald Trump is threatening tariffs if Russia doesn't reach a ceasefire with Ukraine in 10 days.

Russia's wartime boom is faltering — and the International Monetary Fund is the latest to weigh in with a downgrade.

"We are expecting Russia's economic growth to slow down in 2025, and that is very much due to the policy tightening and lower oil prices," said Petya Koeva Brooks, a deputy director of the research department at the IMF, on Tuesday.

After two years of defying sanctions and riding a military spending boom, the country is now facing a sharp slowdown, according to the IMF. The organization has slashed its growth forecast and flagged weakness across key sectors.

The IMF now expects Russia's economy to grow 0.9% in 2025, down from the 1.5% it had projected in April. It's also expecting the country's economy to grow 1% in 2026

Koeva Brooks said the downgrade was prompted by recent economic data in Russia's retail sales, industrial production, and official monthly GDP figures, which reflected "relative weakness."

Russia's manufacturing activity contracted last month, employment has softened, and GDP growth slowed to 1.4% in Q1, down sharply from 4.5% the previous quarter.

The latest downgrade comes just months after an upward revision to 2024 growth, which the IMF raised to 4.3%, citing stronger-than-expected momentum in the fourth quarter. That compares to full-year growth of 4.1% in 2023.

While Moscow has managed to dodge economic collapse since its full-scale invasion of Ukraine in 2022 — in part by pouring cash into defense contracts — the wartime boom that once risked overheating now appears to be unraveling.

Just last month, Russia's economy minister, Maxim Reshetnikov, warned that the country was "on the brink" of a recession.

Pressure from Washington

IMF's updated outlook on Russia's economy came days after the country's central bank cut its key interest rates from 20% to 18% to boost demand as inflation slows.

Meanwhile, geopolitical pressure on Moscow is intensifying.

On Tuesday, President Donald Trump issued a sharp warning to Russian President Vladimir Putin saying the US would impose tariffs and other punitive measures if Russia fails to agree to a ceasefire with Ukraine within 10 days.

The ultimatum sent oil prices surging to around $70 a barrel, their highest level in over a month. But Trump downplayed concerns about potential blowback from additional sanctions.

"I don't worry about it. We have so much oil in our country. We'll just step it up even further," he said, referring to a potential boost in production.