Russia to maintain record high defense spending in 2025, Bloomberg reports
The Kremlin will maintain record high defense spending in 2025, Bloomberg reported on Sept. 24 citing draft budget proposals seen by the outlet.
With no immediate end to the war in Ukraine in sight, the Russian government will increase defense spending to 13.2 trillion rubles ($142 billion) in 2025 from a projected 10.4 trillion rubles ($111 billion) in 2024.
In contrast, social spending is expected to amount to 7.7 trillion rubles ($87 billion), or 21.1% of the Russian budget in 2024.
NATO countries have set a goal to spend 2 percent of the country’s GDP on defense in 2024. Russia is spending around 6 percent.
Russia is on track for an intense economic slowdown due to significant labor shortages and constraints placed on the key sectors that backed growth until now, it was reported on Aug. 9.
Labor resources are practically drained while the competition between the military and business for recruits becomes more fierce.
This is likely to limit the further growth of defense-related industries. The banking and construction sectors are no longer protected from the impacts of high interest rates as the government shuts down the state-subsidized mortgage programs.
Despite Russia's GDP growing by 4% in the first quarter of the year, it will likely slow down to 2% in the last half of the year and hit 0.5% - 1.5% in 2025, says Alex Isakov, Russia economist at Bloomberg Economics.
