Russian economic growth and stability

The Russian economy has shown signs of recovery and moderate growth. Preliminary estimates from Rosstat indicated that the GDP grew by 1.3% on an annual basis in the second quarter, reversing a 0.2% contraction seen in the first quarter. This growth, which contributed to a 0.6% increase for the first half of the year, has exceeded forecasts from the government and central bank, driven largely by military-industrial spending and rising oil and gas prices.

President Vladimir Putin confirmed this trend, suggesting the economy could grow by approximately 1% for the year. Addressing recent attacks on industrial and infrastructure targets, Putin stated these incidents would not have “critical consequences” for the economy, noting that trade infrastructure remains functional. He has instructed the government to prepare a program to rebuild damaged logistics and storage facilities using modern technological standards. Putin also highlighted a significant rise in fixed capital investment, which rose by over 40% between 2019 and 2024, and pledged at least 100 billion rubles to support regions facing difficult budget situations.

However, experts warn of underlying vulnerabilities. Charles Lichfield of the Atlantic Council’s GeoEconomics Center points to rising budget deficits and inflation as critical concerns. Despite higher fossil fuel prices, energy revenues have declined, with oil and gas revenues in the first half of 2026 reported at only 64% of levels from two years prior. These challenges are compounded by Ukrainian drone strikes on refineries, increased Western sanctions, and shifting consumer behavior, as citizens increasingly move toward cheaper food products and store-brand alternatives.