Russia's economy in decline: GDP falls by 2.1% in January 2026

In January 2026, Russia's GDP decreased by 2.1% compared to the same period last year, and industrial production recorded a decline of 0.8%, according to statements by President Vladimir Putin. He called on the Government to implement decisive measures to return to a path of sustainable growth.

The invasion of Ukraine in February 2022 led to the imposition of sanctions by Western countries, and the shift to a war-oriented economy allowed Russia to maintain a temporary economic growth. However, signs of crisis in the civilian economy are becoming evident, and recent data suggest that the defense sector can no longer compensate for the decline.

The Central Bank of Russia has reduced the monetary policy interest rate, in the context of the economy feeling the effects of the offensive in Ukraine and Western sanctions. Additionally, Putin approved an increase in VAT from 20% to 22% to address the budget deficit.

Revenues from oil and gas sales have been affected by sanctions and falling prices, but recently, Russia is benefiting from the rise in oil prices.