Russia’s GDP Rebounds 1.3% as War Spending Masks Deeper Economic Weakness

Russia's economy returned to growth in the second quarter of 2026, months after the Russian leader, Vladimir Putin, publicly rebuked his economic team over a downturn and demanded steps to reverse it.

The state statistics service, Rosstat, released the 1.3% second-quarter figure on August 12, as reported by The Moscow Times. Both the agency and independent economists tied the rebound to factors unrelated to Putin's April intervention.

The result marked Russia's strongest showing in six quarters and exceeded official projections, with the Ministry of Economic Development having forecast 0.9% and the central bank 0.8%. Cumulative growth for the first half reached just 0.6%, roughly half last year's pace and nearly seven times slower than the 2023–2024 wartime boom.

Economist Yegor Susin tied the improvement to additional working days, better external conditions, and a fiscal boost. The war in Iran briefly lifted oil revenues, he noted, while budget spending climbed 16%, with about a third directed to the army and weapons production.

The economy had contracted 0.2% in the first quarter, its first decline since 2023. In April, Putin summoned officials and criticized the economic bloc for failing to meet forecasts, demanding "concrete measures" and later urging that any recovery be solid and sustainable.

The second-quarter reading surprised even government forecasters. Civilian industry nonetheless remained weak, contracting 3.2% year-over-year and 4.6% against 2024 levels, according to the Center for Macroeconomic Analysis and Short-Term Forecasting.

Analysts doubted the surge would last. Liam Peach of Capital Economics expects Russia to remain mired in stagnation, weighed down by high interest rates and the fuel crisis.

Economist Vladislav Inozemtsev, cited by the Moscow Times, warned that Ukrainian long-range strikes on oil refineries and major Wildberries warehouses are seriously eroding the economy.

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War in Ukraine

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He projected inflation 2 to 3 percentage points above earlier expectations, alongside stalled real incomes and a wave of business failures. Inozemtsev cast Kremlin policy—tax increases, business seizures, heavy regulation, and a possible new mobilization—as the graver danger. A renewed mobilization, he cautioned, “will be the end of the entire Russian economy.”

The refinery strikes cited as a drag on output are part of a widening Ukrainian long-range campaign against Russia's fuel sector. On August 8, Ukrainian forces struck the Ilsky refinery in the Krasnodar region and the Rosneft-operated Syzran plant in the Samara region, extending an effort aimed at cutting the oil revenues that bankroll Moscow's war.

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