Russia’s GDP Falls in Early 2026 as Growth Model Weakens

Russia's economic slowdown at the start of 2026 was partly driven by seasonal and weather-related factors, President Vladimir Putin said, according to TASS.

He noted that January had two fewer working days than the same period in 2025, while February had one fewer. These calendar differences, along with weather conditions, affected GDP dynamics.

In January, Russia's economy contracted by 2.1 percent year-on-year. The decline continued in February, with GDP falling by a further 1.5 percent.

Signs of Structural Weakness

Several analysts had warned as early as mid-2025 that the Russian economy was approaching a period of stagnation. Experts from the Center for Macroeconomic Analysis and Short-Term Forecasting pointed out that recent growth relied on a model driven by rising wages, increased household consumption, housing construction, and import substitution.

By 2026, this model had largely exhausted its potential, while new sources of growth have yet to emerge.

Investment Decline and Stagnation Risks

Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs, also highlighted a decline in investment in fixed capital as a key concern. He warned that without corrective measures, the economy could inevitably enter a phase of stagnation.

Overall, GDP fell by 1.8 percent in January-February, reflecting a sustained decline over two consecutive months.

Government Response and Outlook

Putin emphasized the need for targeted measures to stimulate economic growth and address expected challenges. He stressed the importance of maintaining a balanced and resilient budget, even amid volatility in global markets.

Earlier, he described the slowdown as a deliberate policy choice aimed at curbing inflation and preserving macroeconomic stability. According to official data, GDP growth currently stands at around 1 percent, while total economic growth over the past three years has reached 9.7 percent.

Meanwhile, the International Monetary Fund has slightly upgraded its outlook for Russia's economy. Higher commodity prices are expected to support growth, with projections for 2026 and 2027 revised upward to 1.1 percent.