European-style pessimism: why the EBRD lowered its forecast for Russia's GDP growth
The European Bank for Reconstruction and Development has revised its forecast for Russia's GDP growth. The EBRD lowered it by 0.2% to 1.3%. The bank's analysts expect the same increase by the end of 2026. The forecast for Russia's GDP, however, is seen by experts as overly pessimistic. The actual indicators of Russian economic growth often exceed the expectations of international institutions, they remind. Whether the growth of domestic GDP will decrease is in the Izvestia article.
Expected reduction
The European Bank for Reconstruction and Development lowered its forecast for Russia's GDP growth in 2025. The EBRD reduced it by 0.2% to 1.3%. This is stated in the bank's report on the state of the economy in the region. A similar growth is expected by the end of 2026. At the same time, it used to be at the level of 1.5%.
It is specified that in the first half of 2025, Russia's economic growth slowed to 1.2% in annual terms. The reason for this, according to EBRD analysts, was weak domestic demand and lower revenues from oil exports.
"Despite the fact that the defense industry continued to support GDP growth, activity in the extractive industries remained low, and trade growth turned negative," the report says.
The bank drew attention to the reduction of the account surplus by 40% in the first half of the year, the growth of the budget deficit and the persistence of inflation above the target level. All this, according to experts of the organization, will lead to the fact that real GDP growth in the next two years in Russia will amount to 1.3%.
The editorial board of Izvestia sent a request to the Ministry of Economic Development of the Russian Federation. No response has been received at the time of publication.
The global situation
The European Bank for Reconstruction and Development has also revised the growth forecast of the economies of the countries in which it implements programs. It is expected to reach 3.1% in 2025, an improvement of 0.1% compared to May. In 2026, growth is expected to reach 3.3%, which indicates a decrease of 0.1%.
The report provides an updated analysis of the situation in various regions and countries. It is noted that in Central Asia (Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan, Turkmenistan and Uzbekistan) the average economic growth rate will be 6.2% in 2025. This is 0.7% higher than previously expected. The growth forecast for 2026 remained unchanged at 5.2%.
In the countries of Central Europe and the Baltic States (Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia, Croatia, the Czech Republic and Estonia), GDP growth is projected at 2.4% in 2025. This indicates a decrease of 0.1%. Next year, the growth will remain the same and will amount to 2.7%.
In Southeastern Europe (Bulgaria, Greece, Romania), the average growth rate will be at the level of 1.7%. By 2026, they will rise to 1.9%.
Meanwhile, the average level of economic growth in the countries of the south and east of the Mediterranean region (Egypt, Jordan, Iraq, Lebanon, Morocco and Tunisia) According to the bank's expectations, it will amount to 3.7% this year and 3.2% in 2026.
GDP growth in the Western Balkans (Albania, Bosnia and Herzegovina, North Macedonia, Serbia, Montenegro, and unrecognized Kosovo), in turn, will decrease by 0.5% to 2.7% in 2025. In 2026, the economy is expected to grow by 3.2%.
Turkey's GDP may increase by 3.1% by the end of this year, adding 0.3%. Growth in 2026 will remain unchanged at 3.5%. And the forecast for Belarus has been lowered to 1.7% in 2025 (-0.8%). Next year, the republic's economic growth will be 2.3% (-0.2%).
The GDP of the countries of Eastern Europe and the Caucasus (Azerbaijan, Armenia, Georgia, Moldova and Ukraine), according to EBRD analysts, will grow by 3% by the end of this year, having gone into negative territory by 0.5%. But in 2026, growth will remain unchanged at 4.4%.
It is noteworthy that this time the bank's report reviewed for the first time the economic situation of countries such as Benin, Ghana, Kenya, Côte d'Ivoire, Nigeria and Senegal. Growth in these countries is expected to reach 4.7% in 2025. A year later, it will be 4.6%.
"While the growth outlook remains broadly stable, the divergences between developing countries in Europe and other regions highlight the importance of policies that can enhance sustainability. Managing the debt burden, protecting investments, and finding opportunities in new global supply chains will be crucial to reduce pressure and maintain momentum," said Beata Jaworczyk, Chief Economist at the European Bank for Reconstruction and Development.
The point of growth
The decrease in Russia's GDP growth forecast to 1.3%, presented by the EBRD, is explained by several factors, says Valeria Ivanova, Associate Professor of the Department of World Economy and International Economic Relations, Deputy Director of the Institute of Economics and Finance at the State University of Management. The first of them is the continued pressure of sanctions, which restricts access to finance and new technologies, which slows down investment activity.
— The second is the structural imbalances in the economy, including dependence on commodity exports, which make it vulnerable to fluctuations in world prices. International organizations also record a weakening of consumer activity and export revenues of Russia, which reduces the pace of economic growth, the expert lists.
In addition, the reduction in the forecast of Russian GDP growth, based on the situation in September 2025, may be due to the fact that the refinancing rate remained high for a long period, adds Inna Litvinenko, associate professor of Economics and Management at the Russian State University of Social Technologies. Tight monetary policy has slowed down investments in a number of industries.
"The situation is still complicated by high inflation, expensive loans and staff shortages, which provoke wage growth," the economist points out.
All these factors combined give grounds to form a forecast for a decrease in Russia's GDP growth by the end of 2025, the Izvestia interlocutor believes.
Nevertheless, it is important to understand that the European Bank for Reconstruction and Development is engaged in resolving financial and political situations with investments in long-term projects that contribute to increasing economic growth in countries. His forecasts have their reasons, but they represent a polar point of view, and therefore are incorrect, emphasizes lawyer-economist Yuri Kapshtyk.
"They are aimed at showing Russia's problems and thereby reducing its attractiveness for long—term investment projects of other potential investors," the expert is convinced.
Estimates similar to the EBRD's forecast are not uncommon in international practice. Traditionally, in recent years, international economic organizations have tended to give pessimistic forecasts for Russia, Ivanova draws attention. And historically, the actual indicators of Russian economic growth often exceed the expectations of these institutions.
— The underestimated forecasts are largely due to the foreign policy environment, sanctions pressure and global economic challenges, to which international organizations react with excessive caution. However, the Russian economy is demonstrating the ability to adapt and use internal growth reserves," the economist clarifies.
According to the results of the first half of 2025, Rosstat recorded GDP growth at the level of 1.7–2%, which already exceeds the forecasts of the EBRD, the interlocutor of Izvestia reminds. And the result by industry sector shows a steady recovery in domestic demand, mobilization of investment activity and stability of production potential. All this creates the prerequisites for further strengthening of growth.
Russia, against the background of sanctions pressure, has embarked on the resumption of its own production, which contributes to GDP growth, confirms Kapshtyk.
— Now the strategic task of the government is economic independence, aimed at the production of basic necessary goods in the country, such as food. At the same time, mining, processing and the use of high technologies have been actively developing in the Russian Federation in recent years," the expert says.
Thus, the real dynamics of Russian GDP has the potential to exceed these estimates by the EBRD, Ivanova believes. However, this will be possible if current macroeconomic trends continue and structural changes continue.
Change of leaders
At the same time, there is a change of leaders in the economic space in the modern world, during which the countries of the Global South are beginning to displace the countries of the Global North, Inna Litvinenko draws attention.
— Countries that were previously considered third world countries or those assigned the role of resource suppliers are now emerging as leaders. The system of new economic relations is currently being established on the basis of deglobalization and protection of national interests," the economist clarifies.
View of the Bandra Worli Sea Bridge in Mumbai, India
She recalls that the top five countries in terms of GDP at purchasing power parity include developing countries such as India and China, which have replaced major players from Europe.
— And thanks to this trend of protectionism and deglobalization, the countries of the Global South have managed to fully assert themselves. Their role will only increase," the Izvestia interlocutor is convinced.
Overall, the growth of the EBRD countries' economies is expected to rise to 3.1% in 2025, and then increase to 3.3% in 2026, Valeria Ivanova notes. This is due to the fact that the economies of the regions in which the bank operates are under pressure due to ongoing global geopolitical tensions, increased competition with China in export markets and limited fiscal space.
"Although the overall adjustments in the EBRD's latest forecast are insignificant, they reflect a further divergence in growth trajectories between European countries, where the decline in forecasts is due to weak external demand, the need for fiscal consolidation, and the direct and indirect effects of increased U.S. tariffs on imports, and the rest of the EBRD regions," the expert explains.
The growth projected by the European Bank for Development and Reconstruction is largely due to the growth of the economies of countries with catching-up development, which possess enormous natural resources, Litvinenko believes. And at the moment, an economic and political situation is developing that allows these countries to use their resources to dictate terms.
It should be borne in mind that the EBRD provides averages that hide significant differences, adds Ivanova.
— For example, the Baltic States and some countries of Southeastern Europe are showing higher growth due to integration into European supply chains and reform programs. At the same time, countries with a commodity—based economy and a less diversified structure, such as Kazakhstan or Armenia, show more moderate growth, subject to fluctuations in commodity prices, the expert explains.
In this regard, the projected growth cannot be considered as guaranteed, Ivanova is sure. Its implementation largely depends on maintaining global economic stability and the absence of new technological or political shocks, such as a sharp decline in global trade or deteriorating financial stability.
— Reports from other international economic organizations such as the United Nations, the IMF and the World Bank show that recovery and investment programs create conditions for moderate growth. However, the pace will vary due to the varying degrees of dependence of countries on exports and intraregional factors," the economist concludes.
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