Russia Is Predicted To Face Its Worst Economic Downturn In 30 Years If Oil Prices Fall Below $35 And Sanctions Are Tightened
- 2.09.2026, 22:54
The Central Bank of the Russian Federation published this scenario.
For the first time in three decades, the Russian economy may post negative growth for two consecutive years; inflation will return to the record highs seen in the first year of the war, Russian citizens will have to cut back on consumption, and the government will face the threat of the National Wealth Fund being completely depleted. The Central Bank of the Russian Federation has included this forecast in its “risk” scenario for economic development over the next three years, which anticipates oil prices falling to $25–35 per barrel and an intensification of Western sanctions, according to The Moscow Times.
In the “risk scenario” published by the Central Bank in its “Main Directions of Monetary Policy,” Russian GDP is projected to decline by 3–4% in 2027 and by another 1.5–2.5% in 2028. At its peak, in the fourth quarter of next year, the decline will reach 8–9%.
In terms of the rate of decline, this recession will be the worst since 2009 (when the economy contracted by 7.9%). In terms of duration, it will be the worst since 1995–96: that was the last time in modern history that the country experienced an economic downturn for two consecutive years.
The “risky” scenario assumes a “sharp deterioration in external conditions,” comparable in scale to the global financial crisis of 2007–08, according to the Central Bank of the Russian Federation: it assumes a recession in the U.S. and Europe, which could be triggered, for example, by the bursting of the “bubble” surrounding AI companies on global stock markets. “In addition, increased sanctions pressure will lead to a widening discount on Russian goods, as well as a decline in exports and oil production,” the Central Bank’s report states.
In this scenario, according to its estimates, the Russian economy would lose $115 billion in export revenues in the first year of the crisis and another $57 billion in the second. As a result, total export revenues would fall to $286 billion—the lowest level since 2006. Inflation would accelerate to 11–13%, prompting the Central Bank to raise the key rate again—to 19–21%.
Imports of goods into Russia, measured in physical terms, decline by 6–8% in 2027 and 18–20% in 2028, while in monetary terms, they fall by a quarter over the two-year period. Russian citizens will have to “tighten their belts”: private consumption will fall by 1–2% in the first year of the crisis and by another 5.5–6.5% in the second.
A “significant drop in commodity prices” is forcing the government to “make intensive use of the liquid portion of the National Wealth Fund,” which “creates risks of the fund’s resources being rapidly depleted,” the Central Bank writes. To prevent this from happening, the government will have to reform the budget rule and cut budget spending in real terms, the regulator notes.
In the spring, high-ranking Central Bank officials, together with representatives of the Ministry of Finance, warned Vladimir Putin about growing risks to the Russian economy, which began to contract this year. According to Bloomberg sources, they pointed to military spending at a level unsustainable for the budget, which could cause the budget deficit to significantly exceed the target for the third consecutive year: by the end of July, it had reached 6.45 trillion rubles.
Putin, according to Bloomberg’s sources, rejected the finance ministry’s position and ordered cuts to all budget items except for military spending. According to the agency, the Ministry of Finance has cut funding for civilian expenditures by one-third and instructed government-controlled agencies to prepare for a 15% staff reduction, while Putin is preparing for an escalation of hostilities.