Economic performance looked better in recent months

RUSSIA ECONOMICS - In Brief 12 Aug 2026 by Evgeny Gavrilenkov

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Recent economic and financial data indicate the Russian economy has been improving in recent months, though it’s still too early to celebrate. Rosstat’s preliminary estimate shows GDP grew by 1.3% y-o-y in 2Q26. Since GDP fell by 0.2% year-on-year in 1Q26, this means that in the first half of 2026, GDP rose by about 0.6%, with a good chance of surpassing our baseline growth forecast of 1.0% for the year. We’ve noted before that expanding domestic credit has been a key pillar of economic growth in recent months, especially for boosting household consumption. With private consumption driving growth this year, that trend will likely continue through the end of the year as inflation eases. In July, inflation dipped just below 6.0% y-o-y, and Rosstat recently reported that as of August 10, MTD consumer prices showed slight deflation (0.06%). If August ends in overall deflation (which is likely), it could raise the chances of the CBR cutting the key rate in September. Meanwhile, steadily rising imports, which hit $30.8 billion in June - the most recent data - reflect growing consumer demand, while an overly strong ruble hampers domestic manufacturing not tied to government consumption. With oil prices rebounding, Russia’s exports climbed to $43.3 billion in June, and since March the trade surplus has hovered between $12.5 billion and $14.3 billion. Better economic performance was reflected in federal budget revenues, as non-oil-and-gas (O&G) revenues rose 18.3% y-o-y in 7M26 despite lackluster O&G revenues. VAT jumped nearly 25% over the same period, while O&G revenues fell 16.8%. Overall, total revenues grew 8.8% y-o-y, but expenditures climbed 14.5% y-o-y, widening the def...