Russia has significantly reduced its economic growth forecast for 2026, lowering its projected GDP expansion from 1.3% to 0.4%, according to statements by Deputy Prime Minister Alexander Novak. The downgrade reflects mounting pressure on the Russian economy from high interest rates, Western sanctions, slowing domestic demand, and the prolonged economic impact of the war in Ukraine.
Russian authorities also revised their outlook for 2027, cutting the growth estimate from 2.8% to 1.4%. Officials said tighter monetary policy and weaker investment activity are expected to continue restraining economic performance over the coming years.
The Russian economy contracted during the first quarter of 2026, marking its first quarterly decline in nearly three years. Preliminary data showed GDP fell between 0.3% and 0.5% year-on-year, signaling that the wartime growth model fueled by military spending is losing momentum.
Analysts say the slowdown has been driven by multiple factors, including elevated borrowing costs, labor shortages, declining energy revenues, and disruptions caused by Ukrainian attacks on oil infrastructure. Sberbank, Russia’s largest lender, also reduced its own 2026 growth forecast to between 0.5% and 1%.
Despite recent spikes in oil prices linked to tensions in the Middle East, the Russian government has maintained a conservative oil price assumption of around $59 per barrel for budget calculations. Officials aim to preserve financial reserves amid rising fiscal deficits and growing economic uncertainty.
Economists warn that Russia’s economy is increasingly showing signs of stagnation after several years of growth supported largely by defense production and state spending. International institutions such as the IMF and World Bank also expect Russia’s medium-term growth to remain modest compared with previous years.
Source: Patronlar Dünyası/ Prepared by: İlayda Gök