According to the latest forecast from the Bank of Finland Institute for Emerging Economies (BOFIT), Russia's GDP growth slowed to 1 percent in 2025. The pace of private consumption and fixed investment was influenced by moderating wage growth, a higher tax burden, and elevated interest rates. Net exports made a negative contribution to GDP growth in 2025, as sanctions on the oil sector affected export performance.

Growth to stay at 1% in 2026, with a slower pace anticipated in 2027–2028

The forecast projects GDP growth of 1 percent in 2026. Growth in private demand is expected to moderate, while fixed investment lacks strong expansion momentum. Corporate investment capacity is influenced by profit levels and monetary policy conditions. In addition, the fiscal stimulus that supported growth in previous years has gradually faded, and the labour force remains close to full utilisation. High commodity prices will provide support for growth in 2026, though this effect is expected to diminish in 2027–2028.

Sinikka Parviainen, BOFIT Senior Economist, notes: "Over the 2026–2028 forecast period, the structural characteristics of the Russian economy are marked by divergent development paths between the military sector and other parts of the economy. Government investment remains concentrated in the military-industrial complex, while investment in other areas is relatively subdued. Private enterprises not closely linked to the military supply chain show limited investment activity. As a result, overall fixed investment growth is expected to remain flat."

High uncertainty surrounding the forecast

Trends in private demand, global commodity markets, challenges facing the public sector, and continued external restrictions all contribute to significant uncertainty around the baseline forecast. A notable slowdown in wage and income growth or an adverse shift in consumer confidence could lead to weaker economic outcomes than the baseline. At the same time, covering public sector deficits becomes more challenging under the current external environment.

Global crude oil markets remain an important source of variability. Russian oil exports in 2026 are influenced by multiple factors, including existing restrictions, damage to refining capacity from external disruptions, and changes in export volumes. On the other hand, disruptions to shipping in the Strait of Hormuz or temporary adjustments to restrictions could keep Russian oil export prices at a certain level for longer than currently expected.