BOFIT Forecast for Russia 2026–2028 / 1

Abstract

Growth of the Russian economy slowed to 1 percent last year. Weaker trends in private consumption and fixed investment were major drags on growth, following decelerating real wage growth, increased tax burden and high interest rates. Economic growth should remain around 1 percent this year. High prices for commodities will maintain economic growth this year, but the effect fades in 2027-2028. Decelerating private demand and lack of growth in fixed investment are main constraints on growth, which are driven by slowdown in real wage growth and the ability of companies to invest remains curtailed by low profitability and tight monetary policy. Strong growth in fiscal stimulus will no longer foster economic growth witnessed over previous years as Russian labour force continues to be close to full use and the state’s options for funding its deficit are more restricted. Therefore, further high increases in state spending heightens the risk of economic overheating. Our latest forecast assumes sanctions pressure remains at the same level as at the start of 2026 and that the Russian economy experiences no other significant external or internal shocks during the forecast period.