Russia lowers GDP growth forecast to 0.4% from 1.3% for 2026, 1.4% from 2.8% for 2027

MOSCOW. May 12 (Interfax) - The official forecast for Russian GDP growth has been lowered to 0.4% for 2026 and to 1.4% for 2027, Deputy Prime Minister Alexander Novak said.

The longer moderately tight monetary policy continues, the longer the period of modest economic growth will be, so it is necessary to find a balance between economic growth and curbing inflation and to not try to achieve the inflation target at any price, he said.

"The scenario conditions for socioeconomic development to 2029 will be published today [by the Economic Development Ministry]. They are conservative by both external and internal parameters. We expect that in 2026 we'll manage to maintain a positive GDP dynamic at a level of 0.4%. Subsequently, there will be a period of growth rates recovering to 1.4% in 2027 and 2.4% in 2029," Novak said in an interview with newspaper Vedomosti.

The Economic Development Ministry's previous official forecast, released last September, projected GDP growth of 1.3% in 2026, 2.8% next year and 2.5% in 2028.

"It is necessary to take into account that the economic dynamic is cyclical - after a period of strong growth there is always a correction, often accompanied by structural transformation. This is a normal phase for the economy. It is important to devote particular attention to managing risks so as to ease the consequences and ensure a faster transition to balanced economic growth," Novak said.

"We in the government understand that, of course, the Bank of Russia also takes this into account, that the longer moderately tight monetary policy continues, the longer the period of modest growth will be. But we also understand that the larger the gap between demand and supply, the longer tight monetary policy might last," Novak said.

"It is necessary to look for a balance between economic growth and inflation. It is equally bad to pursue the inflation target at any price, including the price of a significant decrease in economic output, and to stimulate the economy with the risk of slipping into uncontrollably accelerating inflation," Novak said.

The Central Bank in April left its GDP growth forecast unchanged at 0.5-1.5% for 2026 and 1.5-2.5% for 2027, so the Economic Development Ministry's forecast for 2026-2027 is now more conservative than even the lower end of this range.