Managed Cooling: Russia's 2025 Macro Forecast Bets on 2.5% Growth Against the Consensus

On 21 April 2025 the Russian Ministry of Economic Development (Минэкономразвития) prepared and submitted to the government the draft scenario conditions of the forecast for socio-economic development covering 2025 to 2028. This time the document attracted unusual interest for one specific reason: the ministry's fresh estimate of Russian economic growth in 2025, formed against a background of persistently tight monetary policy and global trade wars that were raging by the moment of submission.

The answer turned out to be contrarian. The ministry kept its September estimate of 2.5% GDP growth for 2025 — a figure markedly above the Bank of Russia's interval of 1.0-2.0% and above the 1.6% consensus of analysts polled by Interfax in early April. And it did so while symbolically trimming the 2026 forecast to 2.4%, conceding that the effect of tight monetary conditions will spill over into the following year. Taken together, the forecast draws the picture of an economy that the authorities intend to cool deliberately — 2025 has already been branded a year of 'managed cooling' by Deputy Prime Minister Alexander Novak (Александр Новак) — but to cool only down to potential growth rates, and no further.

The Official Frame: 'Managed Cooling' and a 'Soft Landing'

The political framing of 2025 was set before the ministry's document appeared. Novak had already characterised the year as one of 'managed cooling' (управляемое охлаждение), during which the government and the central bank would search for a balance between bringing inflation down and gradually returning it to target while simultaneously keeping the economy from sliding into recession or stagflation. That dual assignment — disinflation without contraction — defines the corridor inside which Russian economic policy is operating in 2025.

Russian President Vladimir Putin (Владимир Путин) couched the task in aviation language. The government and the central bank, he said, had set for 2025 the objective of a 'soft landing' — of 'bringing the growth rates down to land' after the overheating of 2024, when growth amounted to 4.3%.

Against this frame, the forecasts of other institutions look markedly more cautious. The Bank of Russia expects GDP growth of 1.0-2.0% in 2025 and only 0.5-1.5% in 2026. Analysts polled by Interfax in early April saw growth of 1.6% in 2025 and 1.7% in 2026, essentially a flat line around what many consider the lower bound of potential.

2.5 Percent: Anatomy of a Contrarian Forecast

The ministry's decision to hold 2.5% for 2025 was deliberate and defended. 'We left our September estimate of GDP growth in 2025 at 2.5%, proceeding from the dynamics of the first quarter and from long-term trends. We consider this estimate quite realistic,' a ministry representative said when the draft was announced. 'Of course, it is lower than last year, because 4.3% growth is very much. But a certain cooling of the economy, a slowdown in growth rates, is objective from such a base.'

Asked to explain why the ministry's outlook is more positive than the central bank's interval of 1-2% and the April analyst consensus of 1.6%, the representative pointed to first-quarter momentum: the economy is slowing gradually, but no sharp collapse is expected.

The arithmetic of the disagreement is revealing. According to the ministry, finishing 2025 with growth of only 1.5% would require a technical recession — two consecutive quarters of contraction — somewhere along the path. 'In some quarter there would have to be a technical recession; in the baseline scenario we do not build that in. In the stress scenario it is possible, but that is what a stress scenario is for,' the representative stated. The gap between 2.5% and the consensus is thus not primarily a dispute about the strength of demand; it is a dispute about whether the economy tips into outright quarterly contraction in the second half of the year.

The one revision the ministry did make concerned 2026, where growth was trimmed to 2.4% from 2.6%. The stated reason was monetary: the effect, including of tight monetary policy and tight monetary conditions, 'will carry over into 2026'. That is a significant admission. It implies that even in the ministry's optimistic frame the brake applied by the central bank is not fully released in 2025, and that the cost of disinflation extends beyond the year in which it is administered.

Beyond that, the ministry sees growth re-accelerating to 2.8% in 2027 and 3.0% in 2028. The four-year profile — 2.5%, 2.4%, 2.8%, 3.0% — charts, in effect, an economy that passes through the tightening cycle and then recovers its stride, rather than one that suffers a permanent downgrade of its growth capacity.

The Potential-Growth Argument

Underlying the entire forecast is a long-running dispute about the speed at which the Russian economy can expand without generating inflation. The central bank and the Ministry of Economic Development have argued for years over potential growth, both placing it in a range of 2-3%, but with the central bank closer to 2% and the ministry closer to 3%. The ministry's interpretation of its own draft is explicit: it expects growth in 2025 to slow to approximately the potential level.

That dispute is anything but academic. If the central bank is right and potential lies near 2%, then the ministry's 2.5% for 2025 describes an economy still running above capacity even in a 'cooling' year, and inflation risks overshooting the 7.6% forecast, forcing monetary policy to stay tighter for longer. If the ministry is right and potential lies near 3%, then the central bank's 1.0-2.0% interval implies unnecessary slack and foregone output — an economy idling below its capabilities while households and firms bear the cost of high rates.

The ministry also invokes history on its behalf. Over the past three years, it noted, the beginning-of-year forecasts of analysts, of the central bank and of the ministry itself all turned out substantially below the final growth numbers. The ministry presents its stance as a correction of that bias: 'We consider that our forecast is of a moderately conservative character, that is, it is not too optimistic, but not too pessimistic either.' The caveat came in the same breath: volatility is extremely high, and above all the external conditions tied to swings in world markets can influence both the parameters of the forecast and the parameters of the budget.

Inflation: From 7.6% to Target in a Single Step

On prices, the ministry and the central bank are close. The ministry expects inflation in Russia at 7.6% in 2025; the central bank's interval forecast is 7.0-8.0%, which places the ministry's point estimate almost exactly in the middle. The disinflation implied is steep — the draft assumes price growth falls well below 2024 levels during the year — but the ministry treats it as achievable under continuing tight monetary policy.

From 2026 the two institutions converge completely: both the central bank and the ministry expect price growth at the 4% target. The entire burden of disinflation is therefore compressed into 2025, the year of 'managed cooling', and everything from 2026 onward is premised on target-consistent price dynamics. That concentration is what makes the 2025 forecast so consequential: if inflation does not reach the target corridor during the year, the whole medium-term picture — and the monetary conditions underpinning it — must be redrawn.

The Ruble: A Smoother but Weaker Path

Here the ministry forecasts alone — the central bank does not publish exchange-rate projections — and its ruble assumptions were modestly revised. The average rate for 2025 is now seen at 94.3 rubles per US dollar, a stronger estimate than the 96.5 rubles of the September version. The end-2025 rate was left unchanged from September at 98.7 rubles. The average path then drifts weaker: 100.2 rubles in 2026 (100.0 in the September version), 103.5 rubles in 2027 (103.2) and 106.0 rubles in 2028.

The subsequent trajectory embeds steady, moderate depreciation of roughly 2.5-3% per year, a profile consistent with the inflation differential and a gradually weakening trade position, and notably free of any jump even as oil assumptions fall.

The ministry's representative was candid about the difficulty of the task. When the September forecast was made, the embedded rate was considered too weak; two months later, in November and December, the ruble felt too strong; then the sense swung back to too weak again. 'We somewhat lowered our estimate for 2025 — to 94.3 rubles per dollar. Proceeding from all the inputs, including oil prices and the trade balance, we consider this estimate realistic, but at the same time we understand that fluctuations, the volatility of the exchange rate, can be quite high,' he said.

Oil: Brent at $68 and the Return of Urals

The single largest revision in the draft concerns oil. The ministry lowered its average Brent price forecast for 2025 in the baseline scenario to $68.0 per barrel from $81.7 in the September version — a cut of almost 17%. The Brent assumption for 2026 was reduced to $72 from $77, for 2027 to $72 from $74.5, and the 2028 forecast is set at $72. The profile is essentially flat in nominal terms through 2028: the ministry does not expect a meaningful recovery in benchmark prices over the forecast horizon.

The draft also marks a methodological return: the ministry resumed forecasting the price of Urals crude, the benchmark used for tax purposes, whereas the September version projected the export price of Russian oil. The Urals path is $56 per barrel in 2025, rising to $61 in 2026, $63 in 2027 and $65 in 2028. Set against the Brent assumptions, that implies a discount of roughly $12 per barrel in 2025, narrowing modestly in later years as the Urals trajectory rises while Brent stays flat.

Here, too, the ministry diverges from the central bank, and in an interesting direction. The central bank's February forecast embedded expectations for the tax-relevant price of Russian oil of $65 per barrel in 2025, $60 in 2026 and $60 in 2027. The ministry's $56 Urals estimate for 2025 is $9 below the central bank's figure, but the ministry then sees prices climbing through 2028 while the central bank saw them easing.

The representative defended the oil assumptions as conservative in a market where, in his words, 'you see how the estimates of world agencies oscillate — from complete pessimism to complete optimism'. 'We consider that this is a sufficiently conservative estimate. But it, taking into account the budget rule and taking into account the National Wealth Fund (ФНБ), is a normal and realistic one,' he added. The reference to the budget rule matters: the mechanism insulates spending from oil-price swings, so a lower price assumption functions as a buffer for revenue planning rather than a forecast of disaster.

Trade: The Surplus Compresses

The trade forecast embeds the oil revision. Exports from Russia in 2025 are now seen at $410.6 billion, down from $445.0 billion in the September version and about 5% below the 2024 actual of $433.8 billion. Imports, by contrast, were slightly raised — to $323.8 billion from $321.9 billion — and stand roughly 8% above the 2024 actual of $299.6 billion. The combination compresses the trade surplus to $86.8 billion in 2025 from $134.2 billion in 2024: a decline of more than a third in a single year.

In the ministry's trajectory the surplus then recovers steadily: $107.6 billion in 2026, $125.2 billion in 2027 and $145.3 billion in 2028, as export capacity adjusts and import growth moderates.

The 2025 compression remains the key macro fact of the forecast. A smaller surplus means less foreign-currency inflow supporting the ruble, which is coherent with the gradual depreciation embedded in the ministry's exchange-rate assumptions. Trade, oil and the ruble in this draft form a single consistent block: lower Brent, a wider Urals discount, weaker exports, a thinner surplus and a currency that drifts from 94.3 to 106.0 over four years.

The Global Assumption: Slowdown Without Recession

The external frame of the draft is a world that slows but does not break. The ministry put global growth in 2025 at '2% with a little' in the baseline scenario — rates lower than previously expected — and explicitly declined to build a world recession into the base case. 'We are not building in a variant of a world recession. We proceed from the fact that most likely this story with trade flows, trade wars and so on will not be universal. The world is still wider than the United States, so some flows will be redirected,' the representative said.

The comparison he offered was the pandemic: there will be no repeat of the moment when world trade simply stopped and all flows collapsed. 'There will be nothing like that; they will simply go by different routes,' he said. Stress scenarios nonetheless exist in which a world recession is built in — 'it is not excluded, but the probability is not very high'.

For Russia this assumption does substantial work. A non-recessionary world with redirected trade flows supports both the export volumes and the oil prices embedded in the forecast, and it underwrites the ministry's confidence that the economy can decelerate to 2.5% without falling below it. Global turbulence, in the ministry's reading, changes the routes of Russian trade rather than their scale.

The Key Parameters at a Glance

The baseline scenario submitted to the government in April 2025 can be summarised in a handful of numbers:

• GDP growth: +2.5% in 2025, +2.4% in 2026, +2.8% in 2027, +3.0% in 2028
• Inflation: 7.6% in 2025, then the 4% target from 2026 onward
• Ruble, average annual: 94.3 per dollar in 2025, 98.7 at end-2025, then 100.2, 103.5 and 106.0 in 2026-2028
• Brent: $68.0 per barrel in 2025 and $72 in each of 2026-2028
• Urals: $56 per barrel in 2025, then $61, $63 and $65 in 2026-2028
• Exports: $410.6 billion in 2025; imports: $323.8 billion; trade surplus: $86.8 billion, recovering to $145.3 billion by 2028
• Global growth: just over 2% in 2025, with no world recession in the baseline

Risks: What Would Break the Forecast

The ministry organises risk around its stress scenario, and the representative's remarks allow at least three failure modes to be identified. The first is a domestic technical recession: the ministry concedes it is possible in the stress version but refuses to build it into the base case. The second is a world recession with collapsing trade flows, likewise confined to the stress scenario and assigned a probability that is 'not very high'. The third, and the one the ministry emphasises most, is sheer volatility: the external conditions tied to swings in world markets can affect both the parameters of the forecast and the parameters of the budget.

There is also the opposite risk. If the past three years are a guide — when every beginning-of-year forecast undershot the eventual outcome — then even 2.5% may prove conservative, and the long argument between the ministry's near-3% potential and the central bank's near-2% may be settled in favour of neither.

For now, the April draft stands as the government's working definition of 2025: a year in which Russia deliberately trades growth for disinflation, lands at 2.5% after 4.3%, holds inflation to 7.6%, absorbs $68 oil, and exits the year with a currency and a trade position intact enough to re-accelerate to 2.8-3.0% by 2027-2028. Whether the landing is soft depends on variables the ministry itself admits it cannot control — world markets, trade routes, and a quarterly momentum that, if it turns negative twice in a row, would convert 'managed cooling' into something the baseline scenario explicitly refuses to contemplate.

The original reporting and analysis were published by Interfax on 21 April 2025. All figures and quotations in this article are drawn from that report.