Russian Econ Ministry lowers Russian GDP growth forecasts to 0.4% in 2026, 1.4% in 2027 and 1.9% in 2028
MOSCOW. May 12 (Interfax) - The Russian Economic Development Ministry has lowered its forecast for Russian GDP growth in 2026 to 0.4% in its baseline scenario, from 1.3% in the September forecast, a ministry spokesperson told reporters.
The government has reviewed the ministry's revised macroeconomic forecast for 2026 and scenarios for the 2027-2029 forecast and sent them to federal and regional government agencies for consideration.
The ministry also significantly lowered its forecast for Russian GDP growth in 2027, to 1.4% from 2.8%, and in 2028 to 1.9% from 2.5%. For 2029, the ministry projected growth of 2.4%.
The ministry is "is very conservative in its assessment of the positive impact of the Strait of Hormuz crisis on the Russian economy." "In our view, there is practically none. Yes, there is some short-term and possibly medium-term upside for prices but again, we now see that price growth estimates and actual price growth differ somewhat from the awful forecasts some international analysts gave when the crisis began. And from the point of view of volume, because GDP requires an understanding of export volumes, the impact is not that great - we sell all we can, but the question is at what price. And the price question is a deflator question," the spokesperson said.
"First and foremost, we keep economic growth positive throughout the forecast horizon. We do not think GDP will fall into negative territory, not even in 2026. It might for a single month or quarter, and this may have happened in the first quarter, but that's no surprise at all, as the Central Bank has cautioned. But in the year as a whole we expect growth of approximately 0.4%, which is more or less in line with what other analysts on the market estimate, who are predicting between 0.3% and 1.0%. We are closer to the lower bound, which is fairly conservative, and is what we're currently assessing," the spokesperson said regarding external conditions.
"The macroeconomic parameters of the baseline scenario were calculated under tighter monetary conditions than those in the autumn 2025 socioeconomic forecast. The Central Bank of Russia's current key rate estimates for 2026 average at 14.0%-14.5%, compared to 12.0%-13.0% in September last year," the new forecast says.
The spokesperson also said year-on-year GDP dynamics in Q1 2026 [a drop of 0.3%, according to the ministry's estimate] can be explained, among other things, by both statistical factors like a high base in Q1 2025, and calendar factors as there were three fewer working days than in Q1 2025." "Also, the weather factor played a role - in January and February of last year, there was 10% growth due to a mild winter, while this year there was a decline due to cold weather. The situation leveled out in March. So a 0.3% decline in the first quarter seems normal, given all these factors into account. In the second quarter, there will be three more working days than in the second quarter of 2025, so the calendar factor will generally disappear over the first half of the year," the spokesperson said.
The Central Bank in April kept its Russian GDP growth forecast unchanged - 2026 ranges from 0.5%-1.5%, and 2027 from 1.5%-2.5%. So Economic Development Ministry's new forecast for 2026-2027 is more conservative than the Central Bank's and does not even fall within the latter's forecast range.
In external factors, the ministry's forecast still mentions the risk of geopolitical conflicts escalating, causing prices for energy and other goods to rise.
"In the medium term, the risk of energy shortages increases, which will hold back economic growth in many large countries due primarily to reduced output of petrochemicals, fertilizers, agricultural products and light industry goods. The overall decline in economic activity in these countries carries risks of reduced demand for certain Russian exports, primarily non-commodity, non-energy goods," the forecast says.
"Internal risks are associated with ongoing tight monetary conditions. The key ones are further restrictions on investment resources amid a general cooling of the economy, deteriorating financial results for enterprises and low investment appeal amid high risk-free deposit yields," the ministry said.
It also said that "a lessened predictability of external factors could further contribute to an increase in the population's propensity to save, which, combined with the risk of lower incomes, could constrain consumer activity and economic growth in general."
Commenting on the Central Bank's opinion that the positive output gap may have closed in the first quarter, the spokesperson said: "Firstly, if we speak in terms of an output gap, we estimated it to be lower than the Central Bank did even when it peaked. So we believe that if there was an output gap, it closed by the end of 2025, when we saw a sharp drop in inflation with all its ramifications."
"As for potential growth rates, this is a very complex issue. We are firmly convinced that monetary policy influences not only fluctuations around potential but also the potential itself, including due to the length of the investment cycle, its shift, and so on. In the coming years, according to the forecast, we are unlikely to reach 3% annual growth within all existing frameworks, but neither can we say that this is impossible," the ministry said.
