New Russian Economic Model Aims to Bring About a Turnaround

“Russia’s economic model has nearly reached its limits; the new cycle must be structured differently—starting as early as 2027.” With these cautionary words, experts from the government-affiliated think tank “Third Rome” addressed the Russian Presidential Council for Strategic Development and National Projects in a report last week. In their vision for the future, the economists outline “seven pillars” for a new, innovation-driven growth model for Russia.

The “Third Rome” think tank was established in 2024 at the initiative of Russian President Vladimir Putin. The think tank is tasked with developing concepts and solutions for national and global economic issues. The name “Third Rome” alludes to the expression that emerged in the 16th century “Moscow—Third Rome.” This expression has traditionally served time and again as the basis for theories of statehood that emphasize Russia’s claim to leadership in the tradition of the Roman and, later, the Byzantine Empire.

Seven Economic Pillars

The researchers are convinced that Russia’s economic performance will remain subdued without new impetus. Between 2026 and 2036, growth rates will not exceed 1.6% per year, the researchers predict in what they call a “sluggish growth scenario.” This is possible thanks to investments already made in the capital stock: over the past six years, these have risen by 34.6%, the analysts write. However, to double growth rates, a transition to a new economic model is necessary—one that is “intensive” rather than “extensive” as before (with a shift in focus toward quality and labor productivity).

The economists therefore place the emphasis of the new investment cycle on technological progress—the use of artificial intelligence, autonomous systems, and industrial robots. Another pillar is the expansion of “platformization”—that is, the transition of individual industries to digital platforms. This would reduce transaction costs, optimize value chains, and unlock additional resources for growth, the analysts write. According to the calculations, the online segment alone generated 18.3 bio. rubles last year—equivalent to 185.75 billion euros—which accounted for 8.5% of the gross domestic product.

In the new economic model, the state should no longer primarily generate demand itself, but rather limit its role to creating the conditions for more private investment and consumption, the think tank argues. The researchers also consider a redistribution of resources in favor of private companies to be indispensable in the new economic cycle. Changing the structure of government spending “could alleviate competition for labor between the defense and civilian sectors,” according to the economists. The economists identify other key areas as the nationwide expansion of transportation networks in Russia—which should go hand in hand with investments in domestic tourism—as well as the development of telecommunications systems (such as 5G), space technologies, and domestic data centers.

State of Affairs: Growth Factors Exhausted

Analysts at the “Third Rome” think tank write regarding Russia’s current economic model: “The economy has demonstrated its resilience and adaptability in the face of external shocks. Russia has achieved technological sovereignty in a number of areas.” However, they acknowledge that, overall, the Russian economy is increasingly reaching its limits. The economists note that there is virtually no available labor, capacity is underutilized, and demand cannot be propped up by the state indefinitely.

Between 2019 and 2025, Russia’s cumulative economic growth totaled 12%—an average of 1.9% per year, according to the report. This growth was driven by one-time factors, most of which have now been exhausted. One growth factor was Russia’s high employment rate. According to the think tank, the government integrated a total of 2.1 million additional workers into the labor market from 2019 to 2025.

At the same time, the economists point to a negative trend: the core group of workers aged 25 to 54 and 15 to 24 declined by 1.5 million workers. The bulk of the labor force growth came from the cohort of people over 55 (1.8 million workers). The experts warn of the consequences of demographic change. According to the think tank, the number of employed people could decline by 6.1% between 2026 and 2036. The government estimates the potential labor shortage by 2030 at around 3.1 million people.

Analysts note that capacity utilization rose from 75.8% in 2019 to 78.7% in 2025. However, according to forecasts, the potential for further growth is steadily diminishing. This is also evident from data from the Russian Central Bank: In the first quarter of 2026, production capacity utilization stood at 77.6%; in the second quarter, it was only 76.9%.

Slump in Exports Reduces GDP

The think tank’s analysts highlight the loss of numerous export markets due to sanctions and geopolitical turmoil as one of the biggest negative factors for the Russian economy between 2019 and 2025. “According to our estimates, imports rose moderately by 7.4% in volume during the period under review, while exports plummeted by 22.6%,” the think tank writes. 80% of the decline in exports is attributable to reduced shipments of oil, gas, petroleum products, and coal. Without this one-time “external shock,” cumulative gross domestic product growth could have reached 19% instead of 12%, according to the analysts.

Sources: RBC, Frank Media

Source: German-Russian Chamber of Foreign Trade, “New Russian Economic Model Aims to Bring About a Turnaround,” August 28, 2026.

This article was prepared for the German-Russian Chamber of Foreign Trade.