FT: Russian Economy Is Trapped In A Trap
- 13.05.2026, 10:57
The Kremlin's new problems have become known.
Russia has sharply worsened its economic growth forecast for 2026, despite favorable conditions on energy markets. The authorities acknowledge that the economy is facing a set of systemic problems, including sanctions, labor shortages and excessive government spending.
Experts, however, talk about the formation of a "trap" that is increasingly limiting opportunities for growth. The Financial Times writes about this.
Falling forecasts and the first signs of recession
The Russian government has lowered its economic growth forecast from 1.3% to 0.4% in 2026. This significant deterioration in estimates highlights the fragile state of the economy, which until recently was showing growth thanks to massive military spending.
The Russian economy has already contracted by 0.3% in the first three months of the year. This is the first quarterly decline since 2023, signaling the beginning of deeper problems.
Causes of the crisis
Russian Deputy Prime Minister Alexander Novak named labor shortages, Western sanctions and changes in the structure of government spending among the key reasons for the economic slowdown.
The issue is, in particular, a sharp increase in social and military spending, which create additional pressure on the budget. According to Novak, this factor is one of the main challenges for the economy.
Analysts note that the Russian economy has found itself in a vicious circle of interrelated problems. Heavy government spending is fueling inflation, forcing the central bank to keep the key rate high.
Now it stands at 14.5% and has remained in double digits for more than three years. High rates make it difficult for businesses to access credit, which in turn slows down economic activity.
Many companies are experiencing difficulties with debt servicing, which increases the share of bad loans in the banking system.
The energy factor no longer saves
Despite the growth of world oil and gas prices, the Russian economy is not getting the expected effect. Experts note: to stabilize the situation, oil prices should exceed $100 per barrel for a long time.
But after the peak values, the price of Russian Urals oil has fallen to just over $80 per barrel. At the same time, the discount to the benchmark Brent grade is growing again due to sanctions restrictions.
Russia's revenues from oil and gas exports fell 40% year-on-year from January to April. This happened even though April's figures were the highest in recent months.
One of the reasons is the increase in government payments to oil companies to curb domestic fuel prices, which puts additional pressure on the budget.