In 2025, the Russian economy looks very different from the one analysts feared would crumble in 2022. State-owned giants are booming, trade is shifting decisively eastward, and domestic industries are rapidly substituting imports. Over the past three years, GDP growth has consistently outpaced the global average, unemployment has fallen to historic lows, and the groundwork for a fundamentally reshaped economic model has been laid. The economy has reinvented itself under pressure, revealing a resilience that few outside Russia anticipated.
But what does this mean in practice? How has Russia’s economic model changed, and which sectors are thriving or struggling? In the following pages, we explore the state of the Russian economy at the end of 2025, providing a detailed look at the forces shaping its next chapter.
From collapse fears to unexpected resilience
Back in early 2022, the outlook seemed bleak. Many foreign observers – and even some domestic experts – predicted a sharp contraction, if not a full-scale economic collapse. Yet the reality has been strikingly different. By 2025, Russia had navigated a series of external shocks and domestic shifts, emerging with a stable economy and a transformed structure that sets the stage for future growth. This unexpected resilience highlights both the internal resources and systemic flexibility that have allowed Russia to withstand pressures few imagined it could endure.
Maxim Oreshkin, Deputy Chief of Staff of the Presidential Executive Office, noted this summer that the Russian economy was showing consistent growth despite sanctions, and that it outpaced global development rates. “Russia’s GDP has been growing at over 4% annually for four years—this is above the global average. Unemployment is at a historic low of just 2.2%, compared to over 5% a few years ago,” Oreshkin said.
By early December, Oreshkin acknowledged a slowdown in economic growth; however, he described it as a planned adjustment. “We need to move forward steadily and develop because we are on the track of sustainable economic growth. Yes, there’s been a slowdown this year, but it’s a planned slowdown. Maintaining stability is crucial right now,” he said.
The state takes the wheel
A key aspect of the economic transformation has been the increasing role of the state. In response to external constraints and changes in the economic model, there has been an expansion of government procurement, heightened activity among state-owned enterprises, and increased support for companies engaged in the public sector.
This is largely due to the growth of state-owned corporations. For example, Rostec corporation’s revenue surged by 27% last year to reach 3.61 trillion rubles, with net profit soaring by 119% to 131.5 billion rubles.
Rosatom’s overseas revenue doubled from $9 billion to $18 billion over three years, and the order portfolio remains stable at $200 billion. The Rosatom corporation now leads global uranium enrichment with approximately a 40% market share and is a major supplier of natural uranium, nuclear fuel, and medical isotopes for cancer diagnosis and treatment, holding a 30-40% share in these areas.
Growth is also being observed in the investment company VEB.RF. By the end of 2024, the group reported a 45.2% increase in net profit (compared to 2023) measured according to international financial reporting standards, reaching 75.8 billion rubles. Additionally, the group’s assets grew by 25.2%, totaling 5.724 trillion rubles.
Moreover, the growth of the Russian economy has been stimulated by the active use of “state contracts as an investment anchor,” particularly in sectors such as machine engineering, construction, and defense.
During this time, new production chains were established, creating opportunities for domestic tech companies.
Turning East: Russia’s new trade frontier
Sanctions have also accelerated the Asianization of the Russian economy – a development that has caught many experts off guard. The adaptation period that began in 2022 is expected to conclude by the end of 2025 or early 2026, resulting in a redefined economic landscape characterized by a shift in foreign trade relationships, primarily towards China and countries in Asia, the Middle East, and Africa.
This restructuring of trade ties has opened up access to new markets and partnerships. China remains Russia’s largest trading partner, importing oil products, coal, and grain from Russia while supplying electronics, machinery, and digital technologies.
India has emerged as another key trading partner; since 2022, trade volumes with India have surged more than sixfold, and Russia has become India’s fourth-largest trade partner with a turnover of $70 billion. Russia is a reliable supplier for India’s energy sector, providing over a third of its oil imports.
Russia is also actively expanding trade with Central Asian countries, with mutual trade volumes exceeding $45 billion by the end of 2024.
Notably, the share of transactions conducted in rubles amounted to 48% of all import operations and 82% of total foreign economic activity.
Making it at home: Russia’s drive for self-reliance
In over three years of robust import substitution policies, Russia has significantly transformed its external trade structure and domestic production capabilities. According to the Delovoy Profil analytical center, since 2021, import volumes have decreased by about 22%, dropping from $315 billion to $247 billion in 2024. This downward trend continued into early 2025 but at a more moderate pace, with a 2.9% decline in the first four months.
The most pronounced reductions were seen in machinery and equipment imports, which fell by 12% in 2024 and an additional 3.6% in the first quarter of 2025.
The Bank of Russia estimates that the economy has already adjusted to most of the drastic external changes.
In 2025, the federal budget allocated more than 850 billion rubles for import substitution programs. Support mechanisms include subsidies for localization, tax incentives, and simplified procedures for parallel imports, which are gradually decreasing in volume. Experts estimate that full import substitution in key industries could be achieved between 2027 and 2031.
However, the results of these import substitution efforts have been highly uneven. Significant progress has been made in low- and medium-tech sectors, such as food production, light industry, and basic electronics (like power supply units and simple microchips), where substitution rates have reached 70–90%.
Partial success can be observed in medium- and high-tech sectors like machine engineering and telecommunications, where substitution relies on Chinese components and re-export. For example, 60–70% of telecom equipment is now sourced through China or assembled within the Eurasian Economic Union.
Shortcomings in import substitution have become evident in high-tech and regulated sectors, particularly in pharmaceuticals and medical equipment manufacturing, where dependence on imports remains critical.
The ruble on the rise: strength or risk?
Since the beginning of 2025, the Russian ruble has strengthened 45% against the US dollar, according to Bloomberg. The news agency notes that the ruble is now among the top five best-performing global assets after platinum, silver, palladium, and gold. This is the strongest appreciation of the ruble since at least 1994.
Bloomberg attributed this surge primarily to a sharp decline in demand for foreign currency in Russia amid ongoing sanctions. Additional support came from foreign currency sales and the Central Bank of Russia’s strict monetary policy: a high key interest rate has made ruble assets more appealing for residents.
Restrictions on currency transactions – imposed both by regulators and as a result of sanctions – have drastically reduced external demand for foreign currency.
For Russia's central bank, the strengthening of the ruble is beneficial in combating inflation. However, economists from Moscow’s Stolypin Institute of Growth warn that this trend may pose risks. In the report cited by Bloomberg, the researchers noted that an “overvalued ruble” could undermine competitiveness and diminish the country’s investment appeal.
Investment hurdles: growth under pressure
The stringent monetary policy, high capital costs, fiscal pressure, and uncertainty regarding future regulations have stifled business activity and investment optimism. As a result, growth has slowed, and investments have declined.
In the latter half of 2025, fiscal pressures on businesses and households (amid expectations of changes in rates starting in 2026) began to reignite inflation, limiting the central bank’s ability to further ease the monetary policy. A slight relaxation during the summer and fall provided only a modest boost to investment activity. Overall, however, the trend remained unchanged, with investment activity continuing to slow and perceptions of the business climate in the real sector worsening.
This was confirmed by Russian President Vladimir Putin, who said that investment dynamics in Russia became more modest in 2025, though still positive. He noted that in the previous three years, investments in Russia had grown at an accelerated pace.
“In the last three years, investments grew significantly: by 6.7% in 2022, 9.8% in 2023, and 7.4% in 2024. This year’s growth is more modest, but overall, it remains positive,” Putin said.
Workers wanted: the tightening job market
As of October 2025, the Russian labor market found itself in a paradoxical situation. The unemployment rate stabilized around 2.3%, marking a historical low in recent years.
However, the labor supply is nearly exhausted. By the end of 2024, the employed population reached approximately 74.6 million, an increase of 2.3 million compared to three years prior. This indicates that there are virtually no available workers left in the economy. Companies nationwide are grappling with a severe personnel shortage, and there is a structural deficit of skilled labor.
As the year draws to a close, Russia’s overheated labor market is gradually cooling. Companies are adopting a more cautious approach to hiring, with active job postings dropping to around 1.1 million, a 26% decline compared to the previous year. This trend appears to be consistent; in May 2025, employers posted 25% fewer job vacancies than they did in May 2024.
This shift marks a significant change in the landscape: the days when businesses fiercely competed for every available worker, and specialists could easily switch jobs for better offers, seem to be coming to an end.
Looking ahead: challenges and opportunities
Russia continues to face serious structural challenges, ranging from narrowing the technological gap in several sectors to addressing critical demographic and social issues.
Despite sanctions, in 2023-2025 the influx of foreign companies into the Russian market has not stopped. European businesses have not disappeared entirely; new companies are still entering the market, albeit primarily through intermediaries or third countries.
A significant portion of new foreign investment is coming from China; the number of Chinese companies registered in Russia has grown by 1.5-2 times annually since 2022.
Additionally, new clusters of technological growth have emerged, notably in areas such as drones, robotics, IT, and cybersecurity. Fast-growing companies with strong competitive potential, including opportunities for expansion into international markets, are emerging in these sectors.