Kathrine Frich
Russia’s economy is starting to creak under pressure.
The sanctions bite deeper and the war continues to drain resources and several industries are feeling the squeeze.
Behind the scenes, concern is building that the cracks may be getting harder to ignore.
Slowing growth
According to Reuters cited by Digi24, Russia’s economy contracted by 1.8% in the first two months of 2026, raising alarm within the government.
The downturn follows a sharp slowdown in annual growth, which dropped to around 1% in 2025 from 4.9% the previous year.
This cooling has been linked to tight monetary policy from the central bank and ongoing Western sanctions targeting key revenue streams, particularly oil exports.
Despite a temporary rise in oil prices in March driven by tensions in the Middle East, the broader outlook remains subdued.
Official concerns
During a meeting with top economic figures, including central bank governor Elvira Nabiullina and finance minister Anton Siluanov, Putin said explanations so far were insufficient.
“I hope to hear detailed reports today on the current state of the economy and the reasons why macroeconomic indicators are not yet meeting expectations,” he said, stressing that results are falling short even of official forecasts.
The government had projected growth of 1.3% for 2026, though officials have already warned that figure may be revised downward due to weak early performance.
Calls for action
Putin urged his team to develop new strategies to stimulate growth, with a focus on encouraging business activity and reallocating skilled workers to more productive sectors.
He also referenced plans to reduce reliance on volatile commodity revenues, though no specifics were provided.
Meanwhile, the International Monetary Fund recently adjusted its 2026 growth forecast for Russia slightly upward, from 0.8% to 1.1%, reflecting changes in global energy markets.
Sources: Reuters, Digi24
