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Russia  ·  Chronicles · Klaus Dormann

Growth forecasts for 2026 slip below one percent

March 2, 2026  ·  13 min read  ·  By Klaus Dormann  ·  Original (German)
Growth forecasts for 2026 slip below one percent

Author: Klaus Dormann

The London-based European Bank for Reconstruction and Development (EBRD) has also lowered its forecast for Russian economic growth in 2026 to below 1 percent. In September, like the Russian government, it had still expected Russia to achieve a 1.3 percent increase in real gross domestic product in 2026. Now, the European Bank for Reconstruction and Development (EBRD) expects Russia’s economy to grow by only 0.8 percent in 2026—slightly less than in 2025 (+1.0 percent).

For 2027, the EBRD—like the IMF and the World Bank—expects only a very slight pickup in growth to 1.0 percent. The Russian government is much more optimistic. It currently expects economic growth to accelerate to 2.8 percent next year. However, the government plans to update this September forecast in March/April. It is now nearly twice as high as the average growth forecasts in analyst surveys. For instance, analysts surveyed by the Economic Research Institute at Moscow’s “Higher School of Economics” surveyed in mid-February in the “consensus forecast” assumed that growth in the Russian economy would pick up only from 0.9 percent in 2026 to 1.5 percent in 2027.

GDP Forecasts 2024–2027
Year-over-year change in real gross domestic product, in percent

FocusEconomics: Growth forecasts have fallen this sharply

The Barcelona-based research firm “FocusEconomics” publishes monthly analyses of global economic trends. In its report “Consensus Forecast, CIS Plus Countries,” the following figure shows how sharply the forecasts of international institutes and banks (including only a few Russian ones) for Russian economic growth in 2026 and 2027 have fallen over the past 12 months.

Decline in analysts’ forecasts for growth rates in 2026 and 2027
Year-over-year increase in real gross domestic product in %

FocusEconomics: “Consensus Forecast, CIS Plus Countries,” 02/03/26

The analysts’ “consensus forecast” for growth in 2026 has fallen from 1.4 percent in the spring of 2025 to 0.9 percent today (black line). Their average growth forecast for 2027 fell from around 1.5 percent to just under 1.4 percent (orange line).

FocusEconomics comments on GDP growth in 2026:

“Our consensus assumes that GDP growth this year will remain at the 2025 level. Domestic demand is expected to slow due to declining investment activity, higher taxes, restrictive monetary policy, and fiscal consolidation. However, exports are expected to rise despite Western sanctions.”

And how is inflation developing?

Regarding the trend in consumer prices in Russia, FocusEconomics notes:

“The inflation rate fell to 5.6% in December (November: 6.6%), the lowest level since August 2023. … This year, average inflation is likely to reach a six-year low due to weaker domestic demand. Nevertheless, the VAT increase and a weakening of the ruble, which is driving up import costs, are likely to keep inflation above the Central Bank’s target of 4.0%.”

FocusEconomics also published the following chart showing the rise in the inflation rate in January 2026 to 6.0 percent compared to January 2025 (right column).

Monthly inflation trends in Russia
Bars: Year-over-year change in consumer prices in %; right scale
Blue line: Month-over-month change in consumer prices in %; left scale

FocusEconomics: Russia Inflation December 2025, Jan. 16, 2026 (with updated chart)

Consensus forecast: In 2026, the annual inflation rate will fall to 5.8 percent

The following figure shows how the inflation forecasts tracked by FocusEconomics have evolved since February 2025. Analysts now expect the annual average inflation rate for 2026 to fall to 5.8% (black line). That would still be about 3 percentage points lower than in 2025, when the annual inflation rate in Russia rose to 8.7%. In 2027, analysts estimate that the annual inflation rate will fall by another percentage point to 4.6% (orange line).

Trend in inflation rate forecasts (in percent)

FocusEconomics: “Consensus Forecast, CIS Plus Countries,” 02/03/26

The EBRD’s view on the Russian economy

Although Russia remains a member of the London-based “European Bank for Reconstruction and Development,” the EBRD has not invested in Russia since 2014, and its office in Moscow was closed in 2022 (“The EBRD in Russia”). In the February issue of its biannual report “Regional Economic Prospects,” the EBRD therefore provided only the following brief overview of current economic developments in Russia:

Economic growth slowed to 1.0 percent year-on-year in the period from January to September 2025. The main reason for this was robust government spending, particularly in the defense and administrative sectors. Rising military spending boosted production in the automotive and metal industries.

Real wages rose significantly last year, while the unemployment rate hit a record low of 2.1 percent.

Inflation fell to 5.6 percent year-over-year in December 2025—a five-year low.

However, as oil and gas revenues fell by a quarter in 2025, the budget deficit widened to 2.6 percent of GDP. In response, the authorities raised the VAT rate from 20 to 22 percent effective January 1, 2026, which could temporarily fuel inflation.

Real GDP growth is expected to slow to 0.8 percent in 2026 before recovering to 1.0 percent in 2027. Downside risks stem from weak oil prices and the possibility of further economic sanctions.

Was the 1 percent growth in 2025 high or low by global standards?

The EBRD also estimates Russia’s economic growth in 2025 at 1.0 percent, in line with the initial estimate from the Russian statistics agency Rosstat. The Russian online newspaper “New Izvestia” (Novye Izvestia / Новые Известия) analyzed which countries grew even more slowly, at roughly the same rate, or much more strongly. The results of this international growth comparison:

In 2025, the overall economic output of many European countries grew even more slowly than in Russia. High energy prices and U.S. trade policies dampened growth. For example, the German economy grew by only 0.2% last year, and the Austrian economy by 0.3%. Economic growth in Finland and Italy (both 0.5%) as well as in France (0.7%) was also lower than in Russia. Surprisingly, Ireland grew far more strongly than the other EU countries. According to preliminary estimates by the IMF, GDP there rose by 9.1%. One reason for this may have been that international corporations based in Ireland significantly increased their exports to the U.S. in 2025 due to the threat of U.S. tariff hikes.

GDP Growth by Country in 2025

New Izvestia; Maria Sokolova:
Better than Europe, but worse than Asia. What does Russia’s 1% GDP growth mean? 02/26/26

Growth in Russia in 2025 was roughly on par with growth in Mexico (1%) and Japan (1.1%).

Ukraine recorded roughly twice as much growth at 2%, partly because Western countries supported arms production in Ukraine. The U.S. economy also grew by 2%. GDP continued to rise much more strongly in 2025 in China (4.8%) and, above all, in India (6.6%).

In 2025, aggregate economic output also grew much more strongly than in Russia in some Central Asian countries: Tajikistan’s GDP grew by 8.4% last year, and Kyrgyzstan’s GDP by as much as 11.1%. Domestic demand in the Tajik economy was supported by remittances from “guest workers” employed in Russia. Growth momentum for the gold-rich country also came from rising gold prices and increased investment. Kyrgyzstan has developed into an important transit country for goods that are shipped on to Russia. 

Consensus forecasts by the Higher School of Economics through 2032

The Economic Research Department at Moscow’s Higher School of Economics surveys Russian and foreign analysts quarterly on economic developments in Russia over the next seven years. This “consensus forecast” from the HSE Center of Development Institute also determined in mid-February that growth in the Russian economy will remain weak in 2026, falling to 0.9 percent. By 2030, it is expected to pick up gradually to around 2 percent.

Consensus Forecast 2026–2032 (Survey conducted February 12–24, 2026)

Higher School of Economics; S.V. Smirnov: The latest consensus forecast, “Survey of Independent Experts: Minor Adjustments Based on Current Data,” was published on February 25, 2026.

FAZ Commentary: The “warning signs” for the Russian economy are mounting

Katharina Wagner, economic correspondent for Russia and the CIS at the Frankfurter Allgemeine Zeitung since 2019, views the development of the Russian economy after four years of war as follows:

“Economists have become cautious when it comes to forecasting the collapse of the Russian economy. When Western sanctions were drastically tightened following the invasion of Ukraine four years ago, many predicted a collapse. Yet massive government investments in the military and defense industry led to an economic upswing in 2023 and 2024 unlike anything Russia had seen in a long time.

Above all, drone factories and tank foundries were now running at full speed. In supermarkets, Western brands were soon replaced by Russian knockoffs—Dr. Oetker became Dr. Bakers. For Russians who were not on the front lines or living in border regions, the war seemed to have mostly positive consequences.

But over the course of the past year, the situation has changed. The high interest rate, intended to combat inflation fueled by government spending, labor shortages, and sanctions, plunged many companies into crisis. Recently, complaints have been mounting from employees who have had to wait months for their pay.”

Russia’s budget deficit could be three times higher than planned by 2026

Katharina Wagner sees “warning signs” for economic development primarily in rising public budget deficits amid sharply falling revenues:

Revenues from oil and gas exports have already shrunk significantly in 2025, and they are likely to halve again in January and February. The blame lies with the sanctions, which—despite all skepticism—are having an effect and are forcing Russia to sell its oil only at additional cost and with price discounts.

Due to Donald Trump’s threats against India, China—as the last major customer—can now demand even lower prices. As a result, Russian Urals oil currently costs much less, and the ruble is significantly stronger than projected in the Russian budget. If this continues, the deficit could be about three times larger this year than the planned 1.6 percent of GDP. To plug such a large hole, up to three-quarters of the country’s remaining financial reserves in the National Welfare Fund would have to be used.

The government is trying to take more money from citizens through higher taxes and fees. But people are already starting to cut back on essentials. This is likely to harm economic growth.

Katharina Wagner’s conclusion: An “economic downturn” is not certain…

“The state of the Russian economy is more fragile than at any time since the invasion of Ukraine. Nevertheless, it is too early to predict a certain decline. Things could still turn out differently: Higher oil prices in the wake of an escalation of the conflict between Washington and Tehran could temporarily alleviate Russia’s financial problems, as could a devaluation of the ruble. And even if revenues remain low, the state still has other options—from printing money to taking on more debt and raising taxes even further, to making budget cuts.”

… but it is very likely that the “gradual decline” will continue

“It is very likely, however, that the gradual decline of the economy will continue.

Even a peace deal with the Americans would not be followed by an immediate reintegration into the global market. There are no signs of growth momentum on the horizon. The inflation rate, currently just under six percent, will remain high as long as the state pumps large amounts of money into the war.”

Recommended reading:

German-Russian Chamber of Foreign Trade:

Focus analyses, German; also Russian; (selection):
Weak growth, dwindling reserves, and high military spending, 02/18/26

Podcast “Tsars, Data, Facts” by Thomas Baier:

Economic data and forecasts:

4 Years of the War in Ukraine – Economic Aspects:

German Trade with Eastern Europe 2025:

Translated from the German original published on ostwirtschaft.de, March 2, 2026.

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