Russia’s GDP grew 1.1% in Q2 2025, sharply down from 4% a year earlier, according to early estimates. Last year’s growth was driven by surging defence spending despite Western sanctions, but the economy now faces cooling activity and rising recession risks. High interest rates to curb stubborn inflation are weighing on output. President Putin rejected claims that the Ukraine war is crippling the economy, citing low debt and diversification. After 4.3% growth in 2024, the central bank expects 1 to 2% this year, while the economy ministry may revise its 2.5% forecast.