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Sberbank has revised Russia’s 2026 GDP growth forecast downward to 0.5%–1% following a weak first quarter. The slowdown was driven by high interest rates, increased taxes, a strong rouble, and subdued oil prices, which led to an economic contraction at the start of the year. Key sectors such as mining, manufacturing, and construction showed poor performance, while consumer spending also declined. The bank now expects inflation to remain elevated at 6%–6.5%, higher than the central bank’s earlier estimates, indicating continued pressure on the overall economic environment.
Sberbank has reduced its forecast for Russia’s economic growth in 2026, now expecting GDP to expand between 0.5% and 1%, compared to its earlier estimate of 1% to 1.5%. The revision follows a weak performance in the first quarter, reflecting broader economic pressures. Advertisement
The updated outlook was shared ahead of the release of preliminary GDP data by the Economy Ministry and the upcoming official statistics data scheduled for May 15. The revision signals growing caution among financial institutions regarding the pace of recovery in the Russian economy.
Economic activity declined at the start of the year, with GDP contracting by 1.8% across the first two months. This slowdown was mainly due to high borrowing costs, recent tax increases, a stronger rouble, and weaker global prices for Russian oil. These factors impacted business activity even before geopolitical developments, including tensions involving Iran, began to influence markets.
Sberbank’s Deputy CEO Taras Skvortsov stated that the first quarter remained difficult due to tight monetary conditions, which continued to weigh on economic activity.
The impact was visible across multiple sectors. Mining and manufacturing recorded the sharpest slowdown, while consumer demand weakened, affecting retail trade. The construction sector also showed no meaningful growth during the quarter, pointing to limited momentum in investment activity.
Alongside the growth revision, Sberbank has projected inflation for 2026 to remain in the range of 6% to 6.5%. This is higher than the central bank’s earlier estimate of 4.5% to 5.5%, suggesting that price pressures may persist despite slower economic growth.
The downgrade comes in the context of ongoing economic adjustments in Russia, where elevated interest rates have been maintained to control inflation. However, these measures have also limited credit growth and spending, contributing to the weaker outlook.
Source Reuters
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