Russia’s economic growth will reach only 0.6 percent this year, according to wiiw, down from 4.9 percent in 2024 and 1 percent in 2025. The main reason is the restrictive monetary policy of the Russian central bank, which makes credit more expensive and stifles the economy, said wiiw Russia expert Vasily Astrov. Investment activity collapsed by 14 percent in the first quarter.
Ukrainian attacks on Russian energy facilities are also weighing on the economy, leading to fuel supply problems. Internet restrictions are harming the highly digitalized economy, the institute said. Despite the crisis, Russia remains able to continue and finance its war of aggression against Ukraine. Next year, the institute expects growth of 1.3 percent.
Ukraine’s economy is suffering from the consequences of the war: GDP is expected to grow by 1 percent this year and 2.5 percent next year. In addition to attacks on energy infrastructure, the country is struggling with the effects of the Iran war, as Ukraine relies on fuel and fertilizer imports that have become more expensive due to the blockade of the Strait of Hormuz. However, an EU loan of more than 90 billion euros is stabilizing the economy, according to wiiw.
For Central, Eastern, and Southeastern Europe, the institute forecasts robust growth of 2.2 percent (2026) and 2.4 percent (2027), driven by private consumption, EU funds, and investments in the defense industry. However, the region’s industry, which is closely intertwined with Germany, continues to suffer from the German industrial crisis.
Source: www.tagesspiegel.de
