Russia's economy has officially entered a recession
The Institute for Economic Forecasting at the Russian Academy of Sciences has recorded a 1.5% year-on-year contraction in the Russian economy in the first quarter of 2026. This is the worst figure since the introduction of large-scale Western sanctions, according to the SZRU.
The forecast for 2026 has been revised down to minus 0.6%, which is 2.6 percentage points lower than the estimate made in February.
The construction sector saw the sharpest decline. In January 2026, the decline stood at 16% year-on-year, and in February it was 14%. Investment in fixed capital fell by 5.3% in the fourth quarter of 2025, and this trend continues.
Production output in the manufacturing sector fell by 2.9% in January and February. Negative trends were recorded in 20 out of 24 sectors.
Commercial transport freight turnover fell to 430.3 billion tonne-kilometres in February. This is the lowest figure for this month since 2020. Wholesale trade turnover fell by 11.3% in January and by 4.4% in February year-on-year.
Retail trade is barely growing. In February, growth stood at 0.3% compared with the same period last year, which is the lowest figure since March 2023. In the catering sector, growth rates fell from 15.1% in January to 6.8% in February.
The unemployment rate stood at 2.1% in February. Meanwhile, the hh index rose to 11.4 points in March 2026, up from 5.9 points a year earlier, reflecting competition among job seekers.
The growth rate of nominal wages in February fell to 8% year-on-year. In January, this figure stood at 15.1%, and for 2025 as a whole, 13.5%.
The Institute for Economic Forecasting of the Russian Academy of Sciences has been revising its economic growth forecasts since November 2025. At that time, the growth forecast for 2026 stood at 1.2%.
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