Russia Downrevises 2026 Growth Forecast Amid Oil Decline and Wartime Costs
Russia sharply lowered its economic growth forecast for 2026, signaling the government expects a prolonged slowdown from weaker oil revenues, high inflation, and heavy military spending. Unemployment is projected to edge higher as growth pressures mount.
Growth Forecast Cut
Russia sharply downgraded its economic growth forecast for 2026, signaling the government is bracing for a prolonged slowdown as weaker oil revenues, high inflation and heavy wartime spending strain the economy. Unemployment is projected to edge up slightly to 2.3%-2.4%, from 2.2% last year and in the first quarter of 2026, with the government expecting conditions to improve from 2027 onward as the Central Bank cuts interest rates and earlier monetary easing begins feeding through into the economy.
Below-Trend Recovery Expected
GDP growth is forecast to recover to 1.4% in 2027 before accelerating to 2.4% by 2029, with investment, household incomes and consumer spending expected to strengthen from 2027. Even if those projections are met, however, the expected growth rates would remain well below the 3.5% annual expansion that several prominent Russian economists have described as the minimum needed for sustainable development.
Inflation and Central Bank Scrutiny
The Central Bank head, seen as Putin's most capable technocrat, is facing scrutiny from businesses and Kremlin allies amid stubborn inflation. The combination of fiscal pressures from military spending and monetary constraints from sanctions continues to weigh on Russia's economic outlook.