The rapid thawing of diplomatic ties between Russia and the US triggered a rally in Russian markets, but it’s too early to predict a swift end to the Ukraine war. We bumped up our 2025 GDP growth forecast for Russia by 0.1ppt to 1.8%, based on unusually high budgetary spending during the first weeks of the year, which will temporarily support demand. Some of the strong momentum from late 2024 will also spill into H1. By summer, tight monetary policy and fiscal consolidation will cause activity to slow.
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