The Bank of Russia has downgraded its forecast for the Russian economy in 2026. Expected GDP growth has been revised down from 0.5–1.5% to 0–1%, while the inflation forecast has been raised from 4.5–5.5% to 6–7% (the Central Bank’s target is 4%). The updated estimates are set out in the megaregulator’s medium-term forecast.
The Central Bank attributes the revision not merely to a general economic slowdown. According to Elvira Nabiullina, after a decline in the first quarter, economic activity recovered moderately. However, a temporary reduction in production capacity and business expectations of weakening demand prompted the regulator to lower its forecast. The inflation estimate, by contrast, was raised due to higher fuel prices and the pass-through of additional costs to other goods and services.
At the same time, the Central Bank lowered its forecast price for Russian crude oil used for tax purposes from $65 to $60 per barrel. The export estimate was cut from $485 billion to $458 billion, while the import estimate was raised from $330 billion to $339 billion. The forecast for the trade balance surplus was reduced from $155 billion to $119 billion. The current account surplus is now expected at $48 billion, down from $72 billion.
The combination of near-zero economic growth and higher inflation limits the scope for a rapid reduction in the key interest rate. The Central Bank raised its forecast for the average key rate in 2026 to 14.5–14.6%. At the same time, the regulator still expects to bring inflation back to its 4% target next year.