The Russian economy’s prospects for the second quarter and for the year as a whole appear subdued: there are virtually no compelling factors for a significant acceleration in growth, according to Igor Rastorguyev, lead analyst at Amarkets.
The trends in industry, one of the key sectors, are cause for concern. Output in May fell by 0.8% compared to April (seasonally adjusted), while the annual figure deteriorated from +1.9% in April to -0.7% in May. The mineral extraction sector posted a particularly notable decline of 1.7% month-on-month, putting pressure on export revenues and related industries. Domestic demand is also weakening. Sberindex data and Central Bank monitoring show that sectors reliant on household consumption are barely maintaining minimal growth, with cash flows within them shrinking. In some periods, real growth in consumer spending has been close to zero, making it an unreliable driver of economic expansion.
The external sector is also losing momentum. A slight recovery in the second quarter was driven by a geopolitical risk premium in commodity prices, but the market has now largely priced that in: the composite price index for Russian commodity exports fell by 16.9 points over the month, while Brent crude returned to around $73 per barrel. Further price declines would increase pressure on the ruble and inflation, reducing the potential for growth support, the expert warns.
“An important feature is the growing segmentation of the economy,” Rastorguyev notes. “Growth is concentrated in a narrow range of areas (public administration, military security, and certain segments of manufacturing) while other sectors are effectively stagnating. According to Raiffeisenbank, excluding these segments, growth since the beginning of the year has been close to zero. This makes the growth model less sustainable. Economists’ calculations confirm the depth of the problem: the share of industries with declining output rose from 24% in Q4 2025 to 71% in Q1 2026 – essentially, a significant portion of the economy is already in a technical recession.”
According to his assessment, the most realistic scenario for the year is moderate GDP growth in the range of 1–2%, with a significant portion coming from government procurement and infrastructure projects rather than market-driven factors. The trajectory will be shaped by the Central Bank’s tight monetary policy (which constrains lending and demand), export prices, fiscal policy, consumer behavior, and external conditions (sanctions, access to technology and logistics).
The main risks are deepening segmentation, weakening external demand and commodity prices, and rising inflation amid a weakening ruble. In such a situation, the regulator may keep the key rate elevated for longer, further dampening lending and investment.
“The economy is currently undergoing structural transformation: the coming quarters will be about resilience and adaptation, not acceleration. A significant improvement would require strong incentives – such as rising commodity prices or a marked improvement in domestic conditions (lower borrowing costs, higher real incomes, and a more predictable business environment). At present, none of these factors appears dominant, so the baseline scenario remains moderately conservative,” Igor Rastorguyev concludes.