Russia’s GDP shrank between 0.3% and 0.5% year-on-year in the first quarter of 2026. That’s the country’s first quarterly contraction since Q1 2023, and it arrived like a cold splash of water on a Central Bank that had been forecasting 1.6% growth for the same period.
What went wrong
The preliminary estimates, confirmed by both Russia’s Ministry of Economic Development and the Central Bank of Russia, point to a cocktail of factors.
First, a VAT increase that kicked in during January hit consumer spending right at the start of the quarter. Consumers, already squeezed by inflation running at approximately 5.9% to 6%, pulled back on purchases as prices jumped.
Then there was the weather. Adverse conditions in the early months of the year disrupted economic activity across multiple sectors.
