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Russia  ·  Chronicles · Klaus Dormann

Will Russia's weak GDP growth double next year?

September 30, 2026  ·  18 min read  ·  By Klaus Dormann  ·  Original (German)
Will Russia's weak GDP growth double next year?

Author: Klaus Dormann

It’s here—the Russian government’s “Forecast of Socioeconomic Development of the Russian Federation for the Year 2027 and for the Planning Period of 2028 and 2029.” The “Ministry of Economic Development” has raised its forecast for Russia’s economic growth this year from 0.4% to 0.6%. Minister Maxim Reshetnikov announced this at a government meeting on September 24. He had already announced this increase in early September.

The Russian government’s new growth forecast for 2026 is barely higher than the forecasts published last week by Western observers. Both the OECD and the London-based “European Bank for Reconstruction and Development” have now estimated this year’s growth of the Russian economy at 0.5 percent. In their “Joint Economic Assessment” published on Thursday, the five leading German economic research institutes also expect economic growth in Russia to halve to just 0.5% this year.

There is now a broad “consensus” that the Russian economy will grow only very weakly this year. However, it remains a matter of debate whether growth will remain this weak or pick up noticeably as early as next year, reaching 1.4% as expected by the government. As before, the government expects growth to accelerate further to 1.9% in 2028 and to 2.4% in 2029.

Minister of Economic Development: The government’s forecast is “rather conservative”

Maxim Reshetnikov, Minister of Economic Development, emphasized during the cabinet meeting that the government’s forecast remains “rather conservative” overall. The “external price environment”—by which he likely meant oil price trends in particular—could prove to be more favorable than anticipated.

Reshetnikov stressed that the government’s economic policy must focus on increasing the economy’s flexibility and resilience and getting investment back on track. With regard to high lending rates, he emphasized that “the proposed budget structure creates room for easing monetary policy and reviving investment activity.” However, he added that “active structural reforms” are also necessary for sustainable growth (Finmarket.ru).

Consumption Drives Growth

The minister highlighted the importance of consumer demand as the “backbone of economic growth.” According to the forecast, total retail sales will rise by 4.6% in real terms in 2026, compared with the 0.8% the ministry had expected in the spring. The forecast for real wage growth this year was revised upward from 2.2% to 4% (Reuters).

A ministry representative added that the second factor driving consumption growth is an unexpectedly rapid decline in the savings rate. In 2025, it stood at 16.6%. This year, a decline to 9.5% is expected (the previous forecast was 14.3%).

Industrial production will not grow again until next year

According to the forecast, industrial production will decline by 0.2% overall this year—a significant downward revision from the 0.6% growth rate projected in the spring. According to the Federal State Statistics Service (Rosstat), industrial production remained flat year-over-year from January through August 2026 (0.0%). In August, it was 0.6% lower than in the previous year (Finmarket.ru).

Russia: Industrial
Production—Year-over-Year Change in %

Diagramm: Veränderung der Industrieproduktion in Russland gegenüber dem Vorjahresmonat in Prozent bis August 2026, Quelle TradingEconomics

TradingEconomics: Russia Industrial Production, September 23, 26

The forecast for industrial growth next year, however, was raised from 2.1% to 2.2%, and the forecast for 2028 was raised from 2.4% to 2.7% (Vedomosti.ru).

Investment, which has been declining sharply, will not begin to rise noticeably until 2028

The ministry has significantly revised its investment forecast downward for the current year (-5.4% compared to -1.5% in the spring forecast). The decline in investment had already begun last year (-2.3% in 2025), a ministry spokesperson explained, according to Vedomosti. Investment trends are influenced, among other factors, by general uncertainty and the Central Bank’s key interest rate forecast. The ministry forecasts a minimal recovery in investment for 2027, with an increase of 0.2%. For the years 2028 through 2029, investment growth is expected to accelerate to 2.5% and 3%, respectively.

According to the forecast, net exports will contribute an average of 0.2 percentage points per year to GDP growth over the next three years (Expert.ru).

Inflation will fall to the target of 4 percent by the end of 2027

The ministry has now raised its forecast for the annual increase in consumer prices in December 2026 from 5.2% to 6.8%. However, this forecast still falls within the Central Bank’s forecast range, which anticipates a price increase of 6 to 7 percent by the end of 2026.

The main reason for the higher inflation forecast for 2026 is rising fuel prices, which are affecting the prices of other goods, a representative of the Ministry of Economic Development told Vedomosti. He added that the fuel crisis’s impact on overall price trends is “still quite weak.” The devaluation of the ruble is also contributing to accelerating inflation. One potential factor that could temper price increases is the difficulty in exporting grain (due to the war in Ukraine). The higher domestic supply of grain could lead to lower prices.

For the period from 2027 to 2029, the ministry expects inflation to return to the target rate of 4%.

“Conservative” Oil Price Forecasts by the Russian Government

Economy Minister Maxim Reshetnikov emphasized at the government meeting that the government had taken into account the sharp fluctuations in oil prices when raising its forecasts. Oil price trends largely reflect current developments “around the Arabian Peninsula.”

The following chart from the weekly report of the Research Institute of the Moscow-based VEB Development Corporation shows this year’s price trends for Brent crude (green line) and Urals crude (red line) since the spring. Most recently, according to this figure, the Urals price was no longer lower than the Brent price but, at $114, was higher than the Brent price of $107 (see also: TradingEconomics: Urals Oil; dpa-AFX). The difference between the prices of Brent and Urals turned negative (the blue area in the chart shows this “discount” as a percentage, left scale).

Oil Price Trends in U.S. Dollars per Barrel Since March 2026

Diagramm: Preise für Brent-Öl und Urals-Öl in US-Dollar je Barrel seit März 2026 sowie Abschlag des Urals-Preises in Prozent, Quelle VEB-Institut

VEB Institute: Global Economy and Markets, September 25, 2026

According to the government’s forecast, the annual average price of Brent crude oil is expected to rise to $85.7 in 2026. While the price of Urals crude oil will also rise, it will remain significantly lower than that of Brent oil, trading at $61.2. Compared to the May forecast, the price forecast for Brent crude was raised much more sharply than that for Urals crude because, according to the minister, the government now expects a larger discount for Urals crude relative to the Brent price.

Starting in 2027, the government estimates that crude oil prices will slowly decline. The price of Brent crude oil will fall to $73 per barrel in 2027 and continue to decline to $66 by 2029. The price of Urals crude oil will decrease by about one U.S. dollar annually starting in 2027: from $53 per barrel in 2027 to $52 in 2028 and $51 in 2029.

For 2027, the government expects 1.4% growth, while the EBRD forecasts only 0.7%

Next year, according to the government’s assessment, Russia’s weak economic growth will more than double, rising from 0.6% to 1.4%. The “Joint Economic Forecast” by German institutes also expects real gross domestic product to rise by 1% at that time. However, the OECD and the EBRD do not anticipate any noticeable acceleration in economic growth in 2027. According to their estimates, Russia’s GDP will grow by only 0.6% (OECD) or 0.7% (EBRD) next year—almost as weakly as this year.

GDP Forecasts for Russia, 2025–2027
: Year-over-Year Change in Real Gross Domestic Product (Percent)

Tabelle: Prognosen von Regierung, Zentralbank, OECD, EBRD, IWF, deutschen Instituten und Banken für das reale BIP-Wachstum Russlands 2025 bis 2027

Compiled by: Klaus Dormann; as of: September 24, 2026

Russia’s growth remains much weaker than global growth

For 2027, the Russian government forecasts—as it did in May—an acceleration in GDP growth to 1.4%. Even with this increase, the IMF estimates that Russia’s economic growth will still remain well below that of the global economy. In the July edition of its “World Economic Outlook,” the IMF projected global economic growth of 3.4% for 2027.

In their recently updated “Joint Economic Assessment,” German economic research institutes forecast global economic growth of 2.5% for next year, while they estimate that Russia’s economic output will rise by only 1% during the same period. In 2028 as well, Russia’s economic growth, at 1%, will lag far behind global growth, which is projected to be 2.5% again.

In the discussion among the German institutes regarding their forecast for this year’s Russian economic growth in the “Joint Forecast,” the arguments put forward by the Kiel Institute for the World Economy, the Munich-based ifo Institute, and the Berlin-based DIW apparently prevailed. In their individual “Fall Forecasts” published in early September, these three institutes had already estimated growth in Russia for 2026 at just 0.4% and 0.5%, respectively.

The five institutes’ forecasts for Russia’s economic growth next year varied widely in their “Fall Forecasts.” While the Kiel-based IfW expected “zero growth” in 2027—indicating complete stagnation in aggregate economic output—the Berlin-based DIW anticipated an acceleration in growth to 1.5% for next year.

The German institutes do not expect the inflation rate to fall to 4%

Unfortunately, the institutes did not provide any further explanation of their forecasts regarding the development of the Russian economy in their joint assessment. The table on global economic trends only offers an assessment of inflation trends in Russia.

The institutes expect the rise in consumer prices to decline from 8.7% in 2025 to 6.4% this year. For 2027 and 2028, they expect a 5.5% increase in prices in Russia each year. They therefore assume that the Russian Central Bank will not reach its inflation target of 4% by 2028.

The Russian government, on the other hand, like the Russian Central Bank, forecasts that the annual inflation rate in Russia will fall to the target of 4 percent as early as December 2027 and remain at that level in 2028. As shown in the first row of the table below, the Central Bank expects the annual inflation rate to fall from 6 to 7% in December 2026 to 4% at the end of each of the years 2027 through 2029. Starting in 2028, the inflation target of 4 percent will also be met on an annual average basis (second row of the table).

Medium-Term Forecast of the Russian Central Bank (Excerpt)

Tabelle: Auszug aus der mittelfristigen Prognose der Bank of Russia vom 24. Juli 2026 mit Inflation, Leitzins und BIP-Wachstum bis 2029

Russian Central Bank: Bank of Russia’s medium-term forecast following the Bank of Russia Board of Directors’ key rate meeting on July 24, 2026; excerpt; July 24, 2026

Current price trends: The annual inflation rate most recently stood at 6.2%

According to the VEB Institute’s weekly report, the annual increase in consumer prices fell to 6.2% in the week ending September 21, compared with 6.3% the previous week. In December 2025, the inflation rate had fallen to just 5.6%, as shown in the following figure. In May 2026, it was even slightly lower at 5.3%. In August, however, it reached 6.3% again compared to the same month the previous year (Finmarket.ru; Trading Economics).

The colored bar segments in the following figure show the contribution of food (light green), non-food items (gray), and services (blue) to the overall increase in consumer prices. The red line shows the rate of change in industrial producer prices.

Year-over-year increase in consumer prices, in percent

Diagramm: Jährliche Inflationsrate in Russland mit Beiträgen von Lebensmitteln, Nicht-Lebensmitteln und Dienstleistungen sowie Erzeugerpreisen, Quelle VEB-Institut

VEB Institute: Global Economy and Markets, Weekly Report, September 25, 26

EBRD: Russia’s Economy Will Continue to Grow Only Very Sluggyly in 2027

Although the London-based development bank EBRD has not supported investments in Russia since the start of the war in Ukraine in 2022, it continues to publish forecasts on the development of the Russian economy. The bank justifies this by noting that developments in the Russian economy have a significant impact on many countries where it operates, particularly in Central Asia and the Caucasus.

Last week, the EBRD lowered its forecasts for Russian economic growth in 2026 and 2027—originally published in early June—by 0.3 percentage points each. In its “Regional Economic Prospects” report, the EBRD now expects GDP growth in Russia to be only 0.5% in 2026. In 2027, it is projected to be barely higher at 0.7%. Furthermore, “downside risks” to these forecasts could arise from further sanctions and renewed damage to Russia’s logistics and energy infrastructure.

Regarding the development of the Russian economy in 2025 and 2026, the EBRD notes in summary:

Russia’s real economic growth fell from 4.9 percent in 2024 to 1 percent in 2025. Against the backdrop of slowing momentum in the private sector, the trend in aggregate economic output became increasingly dependent on public spending, including military spending.

During the first half of 2026, aggregate economic output rebounded in the second quarter with a 1.3 percent increase in real gross domestic product, following a 0.2 percent decline in the first quarter. In contrast, industrial production remained weak. Business sentiment remained subdued.

Although the rise in consumer prices slowed to 6% in July 2026, leading to a cut in key interest rates, price pressures persist due to labor shortages and government spending programs.

High defense spending has led to an increase in Russia’s budget deficit and greater dependence of the budget on domestic borrowing. Thanks to higher oil prices, Russia’s external economic position remained “robust.”

Ukraine’s economy will also grow more slowly in 2026

In Ukraine, the EBRD now expects growth of only 1.5% in 2026—a decrease of 0.7 percentage points compared to the June forecast. The EBRD lowered its forecast for the coming year even more sharply, from 4% to 2.5%.

EBRD: Growth in Ukraine

Diagramm: Prognose der EBRD für das Wirtschaftswachstum der Ukraine 2026 und 2027, Quelle Handelsblatt

Handelsblatt; C. Volkery: Ukraine. “The Economy Is Plummeting”—Putin’s Attacks Are Ruining Ukraine; Sept. 24, 26

The EBRD cites the blockade of Ukrainian exports via the Black Sea as the main reason for the weaker economic growth in Ukraine. EBRD Chief Economist Beata Javorcik told the Handelsblatt that following Russian attacks on ships and port facilities, Ukraine’s grain and vegetable oil exports plummeted by more than half in August. Exports are at their lowest level since August 2022.

Will Russian currency reserves now be used to benefit Ukraine?

According to the Handelsblatt, there is a new 23 billion euro shortfall in Ukraine’s defense budget this year. The government has proposed various budget consolidation measures to parliament, but there is resistance to tax increases.

EBRD economist Javorcik believes that, ultimately, international lenders remain the only solution to the budget problems. In Kyiv, officials now expect EU member states to bring forward some payments from the 90-billion-euro aid loan for the country. This loan was originally intended to last until the end of 2027. However, it has been apparent for some time that the loan will be exhausted before then.

As a result, some EU member states have initiated renewed discussions about accessing frozen Russian assets. Approximately 200 billion euros in Russian central bank assets are held by the financial services provider “Euroclear” in Belgium. In the long term, there is no other solution than to access the Russian assets to finance Ukraine, says a high-ranking EU diplomat. The alternative would be an additional burden on European taxpayers, and most heads of government want to avoid that, according to the Handelsblatt.

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Translated from the German original published on ostwirtschaft.de, September 30, 2026.