Russia's Economic Growth Dips to 3.1% in Q3

Russia's economy slowed to 3.1% in the third quarter of 2024, as spending on the war with Ukraine continued to raise the country's inflation.

Russia's gross domestic product (GDP) grew by 3.1% in the third quarter of this year, down from 4.1% in Q2, data from the Russian statistics agency showed on Wednesday.

This comes as Moscow continues to spend heavily on war since the start of the Russian-Ukrainian crises in February 2022, which is the main reason behind the increase in commodity prices in stores.

Separate data showed that Russia's annual inflation rate reached 8.5% in October 2024, down from 8.6% the previous month, but still well above the central bank's target of 4%.

Although the International Monetary Fund (IMF) recently raised its forecast for Russian economic growth in 2024 to 3.6%, it expects the economy to slow to 1.3% in 2025 if the war continues.

President Vladimir Putin said earlier this year that Russia’s spending on defense and security would account for 8.7% of GDP in 2024, the highest level since the end of the Cold War.

Moscow is set to raise defense spending by another 30% next year, according to official budget plans.

While the increased military spending has kept the Russian economy from forecasts that it could face years of recession due to Western sanctions, it has also led to inflation and a massive labor shortage at home.

The central bank of Russia warned this week that inflation remains stubbornly high even after raising interest rates to 21%, the highest in more than two decades.