Extended declines in the Russian stock market may foreshadow broader economic difficulties,⁤ according to Andrei Khokhrin, CEO of Ivolga Capital. This comes as Russia’s economy, ⁢previously supported by ⁣ample military expenditure, exhibits increasing signs of deceleration.

GDP ⁣Growth Stalls

Russia’s GDP growth nearly stalled during the summer months, registering a year-on-year expansion of only 0.4% in⁣ both July and August Reuters reported. This represents a significant slowdown ⁤compared to previous periods of ⁤growth ⁢fueled by military spending.

Civilian⁤ Sector Weakness

The slowdown is ‍particularly evident in civilian industries. data indicates substantial⁢ declines in output across several key sectors, as highlighted by Khokhrin:

• Clothing: -9.1%
• Furniture: -12.7%
• Food: -2.1%
• Metals: -8.4%

These ‍figures suggest a weakening of domestic demand and potential disruptions in⁤ supply chains.

World Bank Downgrades forecasts

The World Bank recently revised its economic forecasts for Russia downward. The bank now projects growth of 0.9% in 2025,0.8% in 2026, and 1% in 2027 according to a press release. These projections indicate a prolonged period of subdued ‍economic performance.

Context: Ukraine War and Sanctions

The economic slowdown coincides⁣ with Russia’s ongoing military conflict in Ukraine and the ⁣imposition of international sanctions. While the Russian economy initially proved resilient to sanctions,⁣ the ‍cumulative effect is now becoming more apparent. The recent statement by a senior Russian diplomat, indicating that momentum for a peace deal has faded as reported by The Moscow Times, suggests a prolonged conflict, which ⁤will likely continue to weigh on the economy.