Russia’s economy shrank by 1.5 % in the first quarter of 2026 compared with the same period a year earlier. The full-year contraction is projected at about 0.6 %, according to estimates by the Institute of Economic Forecasting at the Russian Academy of Sciences (IEF RAS) based on the latest Rosstat data. Commercial freight and construction were the hardest hit sectors. More downbeat projections have also emerged, pointing to a deeper and more prolonged downturn in the years ahead. If growth reverts to its long-term average, Russia could drop in the global economic rankings from fourth to seventh or eighth place by 2030.
Data released by Rosstat in April have led many economists to sharply downgrade their outlook for Russia’s economy this year. Official figures point to a deteriorating trend, according to analysts at the Institute of Economic Forecasting at RAS. By their estimates, the economy has already contracted by 1.5 % over the past year, reflecting a year-on-year fall in GDP in the first quarter of 2026 compared with the same period in 2025.
Construction recorded the steepest decline at the start of the year, dropping by 16 % in January and 14 % in February 2026. Analysts at IEF RAS attribute the downturn to a mix of factors, including the cumulative impact of tight monetary policy, weaker investment and calendar and weather effects.
Wholesale trade turnover, after falling by 11.3 % in January, declined by a further 4.4 % year on year in February. Commercial freight turnover in February 2026 was the lowest for that month since 2020.
Manufacturing output fell by 2.9 % over January and February, with declines across 20 of the 24 subsectors. At the same time, growth in mining, up 0.7 % year on year over the two-month period, helped limit the overall contraction in industrial output to 0.8 %. Adjusted for seasonal and calendar factors, output in February 2026 slightly exceeded levels seen in December 2025 and January 2026, analysts said.
Mixed signals are emerging in consumer demand and the labour market. Near-flat retail turnover points to weakening activity over the winter of 2026.
The first-quarter downturn marks the first confirmed evidence of a slowdown already under way, though warnings of an impending recession have been circulating for months.
Economist Yevgeny Nadorshin said in late January that GDP could contract by about 2% this year, driven primarily by a drop in consumption. Analysts at the Centre for Strategic Research (CSR) had already flagged a high risk of recession in November, warning that a persistently tight stance by the regulator could push the economy into sustained negative territory in early 2026 (see NG dated November 19, 2025). Despite a token cut in the Сentral Bank’s key rate, monetary conditions remain extremely tight.
More pessimistic projections have since emerged.
‘We are heading for trouble, a double-digit contraction in the economy. We can withstand a 10 % fall in consumption, but the decline could be even steeper,’ said Robert Nigmatulin, an academic at RAS, speaking at a plenary session of the Moscow Economic Forum (see NG dated April 7, 2026).
Business figures close to the government are still describing the situation as a risk rather than a confirmed downturn.
Investment in fixed capital could decline more sharply in 2026 than the official forecast of 0.5 %, potentially falling by as much as 1.5 %, Alexander Shokhin, head of RSPP, said on Tuesday.
‘If current trends persist, growth will drop to zero. I believe the government and the Central Bank see these trends and will not allow that to happen,’ Shokhin said.
He reiterated RSPP’ position that GDP growth of around 2 % is needed to revive investment. The Ministry of Economic Development currently expects growth of 1.3 %, though it plans to revise the forecast down in April.
Even at 2%, Russia would still lose ground in global rankings. The country has expanded more slowly than the global average for decades, said Vladimir Gamza, chairman of the Russian Chamber of Commerce and Industry’s Council on financial markets and investment. If growth remains below 2 % a year, Russia could slip from fourth to seventh or eighth place globally by 2030, he said. Growth above 3% would allow it to hold on to fourth place. Gamza warned that the decline in fixed capital investment is a particular concern. If the trend continues, Russia risks losing its position in the global economy. Sustained growth will require substantial investment in industry, infrastructure and equipment upgrades, he said
At the same time, analysts at IEF RAS say the downturn could prove less severe, with GDP expected to contract by about 0.6 % in 2026. Additional export revenues from hydrocarbons and raw materials from April, along with calendar effects and a potential pickup in investment if the real key rate falls, could support the outlook, they said.
