Russia's Investment Growth Stalls at 0.5% Amid High Borrowing Costs and Economic Decline
Investment growth in Russia has stalled, with Deputy Prime Minister Alexander Novak reporting a mere 0.5% rise in the first nine months of 2025. Full-year growth is projected to be zero or slightly above, significantly below the Economic Development Ministry's September forecast of 1.7%.
Rosstat reported a 3.1% year-on-year decline in capital spending for the third quarter, leading to a revised expectation of a 0.5% drop in investment for the year. Analysts attribute this slowdown to high borrowing costs and weakened demand, particularly in transport, construction, and extractive sectors.
While defense and import substitution sectors have shown resilience, they heavily rely on state funding. The Central Bank's tight monetary policy has deterred new projects, with economists predicting high borrowing costs will persist into 2026. Overall, investment is projected to decline by approximately 1.5% this year, with significant drops in infrastructure and equipment sectors.
