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5d ago

Russia’s Economy Shrinks in Q1 as Kremlin Cuts 2026 Growth Forecast

The Central Bank keeps a higher projection than the government.

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Russia's President Vladimir Putin attends the Congress of the Russian Mechanical Engineers Union in Moscow, Russia, May 14, 2026. Sputnik/Vyacheslav Prokofyev/Pool via REUTERS ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY.
Russia's President Vladimir Putin attends the Congress of the Russian Mechanical Engineers Union in Moscow, Russia, May 14, 2026. Sputnik/Vyacheslav Prokofyev/Pool via REUTERS ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY.

Overview

  • Official data show GDP fell about 0.2% in the first quarter, the first drop since 2023, with some estimates placing the decline between 0.3% and 0.5%.
  • The government lowered its full‑year 2026 growth forecast to 0.4% from 1.3%.
  • The Central Bank held a 0.5%–1.5% growth range for 2026 and pointed to temporary shocks such as severe winter weather.
  • President Vladimir Putin highlighted a 1.8% rise in March output and told officials to turn the pickup into broader gains.
  • Budget figures show a first‑quarter deficit of about US$60 billion that already exceeds the year’s target, as high interest rates, a VAT hike, and labor shortages strain businesses and consumers.