Overview
- Fresh IMF forecasts put Russia’s growth at about 0.6% in 2025 and 0.8% in 2026, marking a turn from wartime expansion to stagnation.
- Energy takings have eroded, with fossil-fuel taxes dropping from roughly 40% of the federal budget in 2022 to about 25% by Q3 2025 as Urals crude slid to around $50 a barrel late last year.
- The Kremlin has tightened fiscal policy, lifting corporate tax to 25% in 2025 and raising VAT to 22% from January 2026, while defence outlays have surged and welfare and other social spending have been cut.
- Structural and policy headwinds persist, including a shrinking population and acute labour shortages, a key rate that has reached 21% to fight inflation, and polling that shows public confidence weakening.
- Despite mounting strain, experts quoted say Moscow retains short-term ways to fund the war into 2026–27, and Russia has agreed to resume US-mediated peace talks with Ukraine in Abu Dhabi.