Russian Officials Say Economy Remains Stable Despite Q1 Contraction

(MENAFN) According to reports, Russian Deputy Prime Minister Aleksandr Novak has stated that the country’s economy remains structurally strong even after recording a slight contraction in early 2026. He pointed to indicators such as low unemployment, rising household incomes, and steady business activity as signs that the downturn may be temporary rather than the beginning of a deeper recession.

Russia’s GDP reportedly fell by 0.3% year-on-year in the first quarter of 2026, marking its first quarterly decline since early 2023. This slowdown followed a period of relatively strong expansion, with growth exceeding 4% in both 2023 and 2024, before easing to around 1% in the previous year.

Novak described the current situation as part of a typical economic adjustment following rapid growth. He said, “After a period of high growth, there is always a correction,” adding that the economy is undergoing “structural transformation” under what he called “unprecedented pressure from sanctions.”

He also noted that Russia has maintained its position as the world’s fourth-largest economy by purchasing power parity (PPP), a metric that accounts for differences in living costs across countries. Manufacturing output, he said, has increased by nearly 23% since 2022, largely due to import substitution policies and the expansion of domestic production following the departure of many Western firms.

Additional indicators cited by Novak included historically low unemployment levels and rising real incomes. He said real disposable income had increased by 26.1% over the past three years, driven by wage growth, state social payments, business earnings, and property income. He also stated that poverty levels have fallen to a record low of 6.7% based on 2025 data, while unemployment is projected to remain around 2.3–2.4%, among the lowest rates in modern Russian history.

Novak attributed the recent slowdown partly to labor shortages and restrictive monetary policy aimed at controlling inflation. However, he expressed expectations that growth would resume later this year as inflationary pressures ease and financial conditions improve.

Similar assessments were presented by Economic Development Minister Maksim Reshetnikov, who told President Vladimir Putin that the economy has “held up well” despite sanctions and external pressure. The ministry projects GDP growth of around 0.4% this year, with an acceleration to 1.4% expected by 2027.

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