Putin Stated the Beginning of the Decline of the Russian Economy
The dynamics of the main macroeconomic indicators of the Russian economy in early 2026 became negative, President Vladimir Putin stated at a meeting on economic issues on March 23, reported by The Moscow Times.
Vladimir Putin. Photo: Sefa Karacan/Anadolu via Getty Images
According to Rosstat data, the gross domestic product in January was 2.1% lower than last year's level, and industrial output decreased by 0.8%.
Putin noted that there was nothing unexpected here and emphasized the need to return the economy to the path of sustainable growth, without allowing high inflation and labor market destabilization.
Russia's federal budget in January-February experienced a deficit of 3.5 trillion rubles (42.7 billion dollars) due to a decrease in overall revenues. The President called for taking balanced measures to ensure the long-term sustainability of the budget, as its condition is an important prerequisite for economic growth.
According to official statistics, the GDP decline in January was the first since 2023. Economic growth in 2025 slowed to 1%, which is almost five times lower than the previous pace and half of the government's forecasts. Of the 28 main industrial sectors, 21 were in the red: mineral extraction decreased by 1.6%, metallurgy by 2.1%, clothing and footwear production by 3.5%, and for the first time in 15 years, food production fell by 0.5%.
For 2026, the government initially predicted growth of more than 2%, then reduced it to 1.3%, but even this figure may be too optimistic. The Ministry of Economic Development is considering the possibility of lowering growth to 0.7% and preparing a budget sequestration with a 10% reduction in all expenditures, except for war and social welfare.
Experts note that the economic slowdown will lead to a shortfall in non-essential budget revenues, despite the tax reform. According to their calculations, the state may not receive about 500 billion rubles from VAT and 100-200 billion from income tax, and the deficit, instead of the planned reduction, could grow to 8 trillion rubles.
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