The Russian economy ended the first quarter of 2026 with a decline for the first time in three years
The Russian economy showed negative growth in the first quarter of 2026, contracting by 0.3% year-on-year.
This is evidenced by data from a report by the Russian Ministry of Economic Development published on April 29, according to the Ministry of Economic Development. Although growth of 1.8% was recorded in March, it failed to offset the sharp decline in January and February (–1.8% each month).
This quarterly GDP decline was the first since the beginning of 2023, effectively erasing a third of the previous year’s total economic growth. Experts from the German Institute for International Security Affairs note that the non-resource sector slipped into recession for the first time since the start of the full-scale invasion (–0.7% for the quarter). The sharpest declines were recorded in clothing manufacturing (–13.9%) and metallurgy (–10.1%), while attacks on oil refineries led to a drop in petroleum product output.
Analysts at Vector Capital emphasize that the slowdown has affected absolutely all sectors, including the military-industrial complex: production of shells and bombs decreased by 0.8% over the quarter. According to experts at Finam, the situation is exacerbated by a decline in investment imports of equipment and technology. This indicates not a temporary fluctuation, but a gradual erosion of the future production potential of the Russian economy.
Russia is seeing a trend toward staff reductions across various sectors, particularly in IT, healthcare, logistics, manufacturing, retail, consulting, and other business services.
The Russian Ministry of Finance forecasts a sharp increase in regional budget deficits to $21 billion.
Despite a temporary increase in oil export revenues, Russia’s economy continues to accumulate serious imbalances due to the war and high military spending. The budget deficit is growing rapidly, inflation is accelerating, and reserves are gradually being depleted. Analysts point out that oil revenues are only temporarily masking deeper problems.
Russian authorities are planning massive layoffs of public sector employees amid a sharp rise in the government budget deficit. As of April 1, the number of employees recommended for dismissal reached 105,147. These figures are provided by Rostrud.
