GDP keeps falling
Russia’s economy contracted by 1.5% year-on-year in February, the second successive month when annualized GDP was in the red. In January, GDP was down 2.1%. Economic Development Ministry figures show over the first two months of the year, the economy is 1.8% smaller than it was during January and February 2025.
- The ministry blamed the fall in GDP on a calendar factor: in February 2026 there was one fewer working day than in 2025. This is a familiar excuse, with the January fall blamed on two fewer working days than in 2025.
- There are reasons why that explanation seems dubious. The current Central Bank forecast, released in late February, predicted GDP growth in Q1 of 1.6%. The official production calendar, including holidays, was already known by then. Pointing to a reduction in working days cannot explain such a big deviation from the prediction, observed the respected economics Telegram channel Hard Numbers.
- According to Rosstat, output in primary industries was down 2.5% year-on-year in February. Over the two months, it has fallen 2.8%. This was largely due to industrial production. Industrial surveys during the first quarter also showed a noticeable decline. According to the Institute of Economic Forecasting at the Russian Academy of Sciences, the positive surge seen in late 2025 has faded into nothing. “The actual decline in demand set a post-Covid record, forecasts returned to their worst levels since March 2022, real output almost dropped to a post-Covid low and output plans are the weakest since March 2022.”
Why the world should care
After rapid growth in 2023 and 2024 (+4.1% and +4.9% respectively) the Russian economy slowed in 2025 (+1%) and the contraction is now reaching its peak. So far, all the figures for the start of 2026 have come in below official forecasts.
