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Growth forecasts for 2026 slip below one percent

ostwirtschaft.de · March 2, 2026

Author: Klaus Dormann

The London-based international development bank 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 assumes that Russia's economy will grow by only 0.8 percent in 2026, which is slightly less than in 2025 (+1.0 percent).

In 2027, the EBRD—like the IMF and the World Bank—expects only a very slight upturn 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 almost twice as high as the average growth forecasts in analyst surveys. In the "consensus forecast," analysts surveyed by the Economic Research Institute of the Moscow Higher School of Economics in mid-February assume that Russian economic growth will only pick up from 0.9 percent in 2026 to 1.5 percent in 2027.

GDP forecasts for 2024 to 2027
Change in real gross domestic product compared to the previous year in percent

FocusEconomics: Growth forecasts have fallen sharply

The Barcelona-based research company FocusEconomics publishes monthly analyses of global economic developments. In its report "Consensus Forecast, CIS Plus Countries" published in early February, it shows in the following figure how sharply the forecasts of international institutes and banks (including only a few Russian ones) for the growth of the Russian economy in 2026 and 2027 have fallen over the last 12 months.

Decline in analysts' forecasts for growth rates in 2026 and 2027
Increase in real gross domestic product compared to the previous year in %

FocusEconomics: "Consensus Forecast, CIS Plus Countries," February 3, 2026

The analysts' "consensus forecast" for growth in 2026 has fallen from 1.4 percent in spring 2025 to 0.9 percent now (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 development in 2026:

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

And how will inflation develop?

FocusEconomics comments on consumer price trends in Russia:

"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 figure showing the rise in the inflation rate in January 2026 to 6.0 percent compared to January 2025 (right column).

Monthly inflation trend in Russia
Columns: Increase in consumer prices compared to the same month last year in %; right scale
Blue line: Change in consumer prices compared to the previous month in %; left scale

FocusEconomics: Russia Inflation December 2025, 16.01.26 (with updated chart)

Consensus forecast: Annual inflation rate to fall to 5.8 percent in 2026

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

Development of forecasts for the inflation rate in percent

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

What the EBRD thinks about the economy in Russia

Russia remains a member of the London-based European Bank for Reconstruction and Development. However, the EBRD has not invested in Russia since 2014, and its Moscow office was closed in 2022 ("The EBRD in Russia"). In the February edition 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 administration sectors. Rising military spending boosted production in the automotive and metal industries.

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

Inflation fell to 5.6 percent year-on-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 on 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 exist due to weak oil prices and possible further economic sanctions.

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

The EBRD also estimates Russian economic growth in 2025 at 1.0 percent, in line with the initial estimate by the Russian statistics office Rosstat. The Russian online newspaper "New Izvestia" (Novye Izvestia / Новые Известия) has analyzed which countries grew even more weakly, at a similar 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 weakly than in Russia. High energy prices and US customs policy weighed on 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%) and France (0.7%) was also lower than in Russia. Surprisingly, Ireland grew much 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 US in 2025 due to the threat of US tariff increases.

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

In 2025, overall economic production also grew much more strongly than in Russia in some countries in Central Asia: Tajikistan's GDP grew by 8.4% last year, while Kyrgyzstan's GDP grew by as much as 11.1%. Domestic demand in the Tajik economy was supported by remittances from "guest workers" employed in Russia. Rising gold prices and increased investment also provided growth impetus for the gold-rich country. Kyrgyzstan has developed into an important transit country for goods that are delivered on to Russia. 

Consensus forecasts of the Higher School of Economics until 2032

The economic research department of the Higher School of Economics in Moscow surveys Russian and foreign analysts every quarter on economic developments in Russia over the next seven years. In mid-February, this consensus forecast by the HSE Centre of Development Institute also determined that Russian economic growth will remain weak in 2026, falling to 0.9 percent. By 2030, it is expected to pick up slightly to around 2 percent.

Consensus forecast for 2026 to 2032 (survey conducted from February 12 to 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 multiplying

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

"Economists have become cautious about predicting the collapse of the Russian economy. When Western sanctions were drastically tightened after the invasion of Ukraine four years ago, many predicted a collapse. However, enormous state investments in the military and armaments led to an upswing in 2023 and 2024 that Russia had not seen in a long time.

Drone factories and tank manufacturers in particular were now running at full capacity. Russian copies soon replaced Western brands in supermarkets – Dr. Oetker became Dr. Bakers. For Russians who were not on the front lines or living in border areas, the war seemed to have mainly positive consequences.

But over the past year, the situation has changed. The high key interest rate, which is being used to combat inflation fueled by government spending, labor shortages, and sanctions, has plunged many companies into crisis. Recently, there have been increasing complaints from employees who have to wait months for their wages.

Russia's budget deficit could be three times higher than planned in 2026

Katharina Wagner sees "warning signs" for economic development, particularly in the rise in public deficits amid sharply falling revenues:

Revenues from oil and gas exports have already shrunk significantly in 2025, and are likely to halve again in January and February. This is due to sanctions, which, despite all the skepticism, are having an effect and mean that Russia can only sell its oil at additional cost and at reduced prices.

Because of Donald Trump's threats to India, China, as the last major customer, can now demand even lower prices. As a result, Russian Ural oil currently costs much less and the ruble is significantly stronger than anticipated in the Russian budget. If this situation persists, the deficit could be around three times larger than the planned 1.6 percent of economic output this year. 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 up.

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

Katharina Wagner's conclusion: An "economic decline" is not certain...

"The state of the Russian economy is more fragile than ever since the invasion of Ukraine. Nevertheless, it is too early to predict 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 higher debt and even higher taxes to budget cuts."

... but the "gradual decline" is very likely to continue

"However, it is very likely that the gradual decline of the economy will continue.

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

Recommended reading:

German-Russian Chamber of Foreign Trade:

Focus analyses, German; also Russian; (selection):
Weak growth, declining available reserves, and high military spending, February 18, 2026

Podcast "Tsars, Data, Facts" by Thomas Baier:

Economic data and forecasts:

Four years of war in Ukraine – economic aspects:

German trade with Eastern Europe in 2025:

Original article (German):

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