Putin Was Told That A New “cycle” Had Begun In Russia
- 20.08.2026, 11:44
But the business world knows nothing about this.
"We have begun work on launching a new investment cycle," Russian Deputy Prime Minister Alexander Novak reported to Vladimir Putin at a meeting of the Council for Strategic Development, according to The Moscow Times.
Investment plummeted 14.3% year-over-year in the first quarter following a 2.3% decline last year, and all forecasts—including the government’s—predict the downturn will continue this year. But Putin has ordered a return to growth and warned that this will be “the most important indicator of the economic authorities’ effectiveness.”
Novak attributes the end of the previous investment cycle to the situation at the largest corporations, including state-owned ones. According to his data, the five largest state-owned companies account for more than 15% of all investments in the country. But starting last year, “many so-called megaprojects have passed their main investment phase… and are practically complete.” Among those cutting back on investment programs are Gazprom, Russian Railways, and Rosatom.
To launch a new cycle, it is necessary to clear key industries of accumulated debt and losses, create incentives for the full utilization of existing infrastructure, ensure state support for investments, and improve the investment climate, Novak listed as priorities. Amendments have already been made to the bankruptcy law, shifting the focus from business liquidation to restoring solvency; underutilized export infrastructure is being repurposed for domestic freight flows, and a multi-fold increase in investments in technological sovereignty projects is being prepared, the Deputy Prime Minister noted.
The business community is unaware that a new cycle has begun. Among the 12,000 enterprises surveyed by the Central Bank, more plan to reduce investments than those preparing to increase them. Investment is largely a matter of “confidence and sentiment,” noted Minister of Economic Development Maxim Reshetnikov, and both are currently low among Russian entrepreneurs.
Novak traditionally promised “stable tax conditions, protection of property rights, and a reduction in administrative barriers” to stimulate investment. In reality, the exact opposite is happening, and the business community, according to Reshetnikov, “never forgets a thing.”
Contrary to the promises made by Putin and Finance Minister Anton Siluanov, the authorities have raised taxes twice—in 2025 on corporate income tax and personal income tax, and in 2026 on VAT, and the business community fears that the tax burden will rise again next year: the budget deficit for the first seven months of the year stood at 6.5 trillion rubles. The prospect of new taxes is making businesses very nervous, noted Sberbank Deputy Chairman Taras Skvortsov. Increasing budget revenues through rapidly implemented ad hoc measures shortens companies’ planning horizons and hinders the implementation of projects with long payback periods, warned Emil Ablaev, a leading expert at the TsMAKP analytical center . An important step, according to Novak—the adoption of a law on the statute of limitations for privatization deals—has not halted the redistribution of property, and administrative barriers—often nonsensical—are only growing, noted Vladislav Inozemtsev, Ph.D. in Economics .
Putin is convinced that without investment there will be no economic growth, but the issue is not so much about investment as it is about its quality. The investment boom of recent years has not yielded significant returns. “Investment has grown by a third over the past three years. But we do not yet see that this has translated into growth in labor productivity,” said Central Bank Chair Elvira Nabiullina.
“Both among the general public and among experts, the prevailing view is that investment is the main driver of economic growth. It is only one of the factors,” says Central Bank Chairman’s Advisor Kirill Tremasov. “Economic growth based solely on investment is typically unsustainable.” In his view, the stronger and more sustainable growth that Putin demands is possible through an increase in overall productivity, which “includes, among other things, improving institutions and integrating into the global economy.”