Russia Cuts Growth Forecast as Economy Slows

Russia has sharply downgraded its economic outlook for the coming years. Deputy Prime Minister Alexander Novak said the Economy Ministry had cut its gross domestic product (GDP) growth forecast for 2026 from 1.3% to 0.4%.

The ministry now expects the economy to grow by 1.4% in 2027, down from an earlier forecast of 2.8%. Growth is projected to reach 2.4% in 2029.

Novak said the economy had entered a phase of “correction” after strong growth in 2023 and 2024. Russia continues to face Western sanctions, high interest rates and pressure on its oil exports.

Available data shows that Russia’s economy contracted by 0.3% quarter on quarter in the first quarter of 2026, its first quarterly contraction since the start of 2023. Higher taxes and sanctions-driven discounts on Russian oil have also weighed on growth.

The government is still assuming an oil price of $59 per barrel in 2026 and about $50 in the following years. Analysts, however, say Russia could benefit in the short term from higher oil prices following the US and Israeli attacks on Iran.

President Vladimir Putin last year asked the government to ensure that the economy returned to steady growth from 2026.

(reuters, max)