French analysts: Russia is becoming similar to Iran, the economy is entering a phase of stagflation

Russia's economy is losing momentum and entering a phase of stagflation, increasingly resembling the Iranian model, with prolonged stagnation, low modernization, and dependence on China. This is stated in report of the French Institute of International Relations (Ifri), prepared under the supervision of nine European think tanks.

Ifri notes that despite the unprecedented sanctions, Russia's macroeconomic situation looked stable in 2022-2024. A drop in trade with Europe was offset by expanding ties with China, and the economy was supported by high commodity prices, opportunities to circumvent sanctions, and controlled budget spending.

However, economic growth began to slow in late 2024. Inflation rose, the budget deficit reached 2.6% of GDP, and the liquid part of the National Welfare Fund shrank to $31.5 billion in June 2025.

"The long-term outlook for Russia is disappointing. Its modernization potential is limited and its economy is expected to slow down significantly, becoming increasingly dependent on China. Importantly, Russia's gas sector will not recover from the loss of the European market, which will result in a loss of export revenues for Gazprom of about 160 billion euros in the period 2025-2030," the report says.

The European Union, on the other hand, has successfully survived the energy gap with Russia. Ifri estimates that imported fossil fuel costs have halved since 2022, when Russia created the energy crisis in Europe.

At the same time, Ifri emphasizes that Russia's ability to continue its aggression against Ukraine is "by no means exhausted.".

• Bloomberg predicted in September that Russia's economy will not be able to get off the war track after the war in Ukraine ends.