Russia's bond outflows and Fitch warns of continued economic pressure

In July, investors pulled roughly $965 million from Russian government bonds, disappointed by a slower‑than‑expected decline in interest rates. The outflow reflects a widening gap between market expectations for rapid rate cuts and the Central Bank of Russia’s cautious stance, prompting some capital to shift toward equities.

A Fitch Ratings report released shortly after highlights that Russia’s economy will remain under strain. Fitch projects GDP growth of about 1 % in 2025, well below the 4.5 % average of 2023‑2024, while inflation stays above the central bank’s 4 % target and real interest rates remain high. Supply‑side constraints, intensified by Ukrainian drone attacks on fuel infrastructure, and a rising fiscal deficit linked to war‑related spending further limit growth prospects.