Russia’s government sharply downgraded its forecast for economic growth in 2026.
Deputy Prime Minister Alexander Novak said the government now expected GDP to grow by only 0.4 percent, down from an earlier forecast of 1.3 percent.
The forecast for 2027 was also lowered, from 2.8 percent to 1.4 percent.
Russia’s economy expanded rapidly in 2023 and 2024 amid a major increase in military and military-related state spending. That stimulus gradually weakened, while high interest rates, sanctions and problems with oil and gas revenues increasingly weighed on economic activity.
According to figures cited by Reuters, the Russian economy contracted by 0.3 percent in the first quarter of 2026.
The forecast downgrade came only days after the Finance Ministry reported a 5.877-trillion-ruble budget deficit for the first four months of the year.
The government was therefore confronting slower economic growth, declining oil and gas receipts and much faster-than-planned budget spending at the same time.