Russia's economy slows in 2026 as war-driven growth falters

Russia's economic growth has markedly decelerated in the first half of 2026. Gross domestic product rose only 0.2% in the first five months, down from a 1% increase in the same period of 2025, and the first quarter recorded a 0.3% contraction. Analysts have cut the 2026 growth forecast to 0.4%, citing the diminishing impact of military‑industrial output on the broader economy.

The slowdown is reflected in widening regional disparities, with the capital receiving most public investment while many peripheral regions face stagnation or recession. The energy sector has been hit by refinery attacks, reducing crude‑processing capacity and pushing up fuel and logistics costs. At the same time, Russia’s reliance on China for trade and finance is deepening, and a growing number of companies with deteriorating balance sheets are struggling to service debts, raising concerns for financial stability.

Overall, the data suggest that while defence spending and energy exports continue to support the economy, the civilian sector is losing momentum, pointing to a “two‑speed” model that could limit long‑term growth prospects.