Kathrine Frich
Russia’s economy has endured years of sanctions, military spending and declining trade with Western nations.
While the Kremlin continues to project confidence, warning signs have been emerging across several sectors.
Now, even institutions closely linked to the Russian government appear to be acknowledging serious risks ahead.
Recession signals
According to Ukraine’s Foreign Intelligence Service (FISU), several major Russian economic institutions believe the country is approaching stagflation. The claim was reported by Ukrinform, citing intelligence findings.
The institutions referenced include the Center for Macroeconomic Analysis and Short-Term Forecasting, the Higher School of Economics and the Central Bank of Russia.
FISU said key indicators suggest the economy has been sliding toward recession since November 2025.
Troubling indicators
According to the intelligence report, the composite leading indicator for recession rose above 0.44, far beyond the critical threshold of 0.12.
At the same time, the symmetric indicator measuring recovery potential fell to 0.05 in November 2025, down from 0.10 in October and well below the critical level of 0.35.
“This means not only a high probability of recession, but also extremely low chances of a quick recovery,” the intelligence report notes.
Industry slowdown
The industrial sector is also showing signs of strain. The S&P Global Manufacturing PMI index for January 2026 remains below the 50-point mark, indicating contraction.
Profitability in industry has dropped significantly, falling from 20 percent in September 2024 to around 12 percent and continuing to decline.
Analysts cited in the report warn that Russia could face a prolonged downturn lasting more than a year.
Consumer pessimism
Public sentiment has also deteriorated. The Russian research group Levada Center reported that the economic expectations index dropped to 113 points in January, compared with 140 in 2024.
The consumer sentiment index fell to 98 points, returning to levels last seen in late 2022 and signalling growing pessimism among Russians.
According to projections from Russian institutions themselves, the baseline scenario for 2026 includes weaker growth, falling investment and a real possibility of a technical recession.
Sources: Ukrinform; Foreign Intelligence Service of Ukraine; Levada Center.
