The Russian Economy Is Slowing Down In All Sectors
1- 29.04.2026, 22:05
The Russian economy ended the quarter falling for the first time since 2023.
Russia's economy ended the first quarter of 2026 in the negative, the Russian Ministry of Economic Development reported on Wednesday, The Moscow Times reports.
January-March GDP contracted by 0.3% in annualized terms, despite growth in March (+1.8%), which was not enough to cover the decline in January (-1.8%) and February (-1.8%). The quarterly decline in GDP was the first for Russia since the beginning of 2023, and as a result: the economy lost a third of the growth shown last year (1%).
The economic dynamics in Russia have deteriorated significantly in recent months, states Janis Kluge, an expert at the German Institute for International Security Affairs. For the first time since the beginning of the war, the non-resource industry slipped into recession (-0.7% for the quarter), and in some sectors began a full-fledged collapse: production of clothing fell by 13.9%, output in metallurgy - by 10.1%. After the strikes on refineries, the production of oil products fell by 0.5%, and for the second year in a row the production of foodstuffs (-0.2%) was in minus.
"The economy is slowing down in absolutely all sectors," wrote analysts of Vector Capital. Even the military-industrial complex, which eats trillions from the budget, went into negative territory: the output of "finished metal products", to which statistics refers shells and bombs, decreased by 0.8% in the first quarter.
All this is accompanied by a reduction in investment imports - primarily of machinery, equipment and technology, notes Finam analyst Yaroslav Kabakov: "We are not talking about a temporary slowdown, but about a gradual weakening of the future production potential of the economy".
The economy has now entered a kind of "twilight zone," Kluge points out: on the one hand - growing domestic problems, on the other - the positive effects of the war in Iran and soaring oil prices. The Russian Urals grade, which was sold at $40 and above at the beginning of the year, now costs more than $100 per barrel. According to the Central Bank of the Russian Federation, this will bring $58 billion of additional raw materials revenue to the country and 1.7 times increase the trade surplus.
But we should not expect economic growth to accelerate, says Sberbank. It worsened the forecast for GDP growth rate to 0.5-1%, raised the inflation forecast (to 5-6%), and said that business is recording a drop in turnover for the first time since 2022. "While earlier it was possible to say that all the problems are only in processing, which obviously suffers from the high rate does not depend so much on consumer demand, now it seems that the economy is slowing down on the side of the general consumer as well," Vector Capital wrote.
The rise in oil prices associated with the conflict with Iran may bring an additional 1-3 trillion rubles to the budget in 2026, but will hardly fix the situation in the economy, says Natalia Milchakova, a senior analyst at Freedom Finance Global: "The economy is facing significant risk
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