Slow is not right: Putin noted the negative dynamics of GDP and industrial production

At the beginning of 2026, Russia faced negative dynamics of key macroeconomic indicators: GDP in January was 2.1% lower than a year ago, while industrial production fell 0.8%. Vladimir Putin stated this on March 23 at a meeting on economic issues. This is mainly due to the calendar factor — there were fewer working days in January 2026 than in 2025 — but the Cabinet of Ministers will have to put the economy back on a growth trajectory and slow down inflation, the president stressed. Experts called this dynamic a signal of "cooling" rather than a sign of a crisis. The situation on the global energy market was also discussed at the meeting. Putin suggested that oil and gas companies consider channeling additional revenues to repay debts owed to domestic banks.

Why are macroeconomic indicators falling

On March 23, Prime Minister Mikhail Mishustin, First Deputy Chairman Denis Manturov, Deputy Chairmen Alexander Novak and Marat Khusnullin, ministers Maxim Reshetnikov and Anton Siluanov, and Central Bank Governor Elvira Nabiullina arrived in the Kremlin for a meeting with the president. At the beginning of the meeting, Vladimir Putin reported on the "low, negative dynamics" of the main macroeconomic indicators: in January, Russia's GDP was 2.1% lower than a year ago, and industrial production decreased by 0.8%. Despite the fact that, according to the president, "there is nothing unexpected for us here" (the decline is explained, in particular, by the fact that there were fewer working days this January than in the past), he drew the Cabinet's special attention to this dynamic.

— It is necessary to return to the trajectory of sustainable economic growth, of course, with a slowdown in inflation and maintaining stability in the labor market. At first glance, these are multidirectional things, but we talked about the need to strive for exactly this result. It's not easy, of course, but we must strive for it," the president said.

Photo: TASS/Gavriil Grigorov

At the same time, the unemployment rate in Russia remains low - at the beginning of the year it was 2.2%. By the beginning of March, inflation was 5.7% in annual terms, although in January it reached 6%.

The January jump is a mixture of one—time factors and seasonal effects, rather than a new full-fledged acceleration of inflation, said Vladimir Chernov, analyst at Freedom Finance Globa. At the same time, by the end of the year, the Central Bank expects inflation in the range of 4.5–5.5%. The already accumulated effect of the Bank of Russia's tight monetary policy will allow inflation to slow down further, he is confident. According to the expert, the trend will continue due to cooling domestic demand and a higher propensity of the population to save.

The drop in GDP in January, as well as a decrease in industrial production, also looks like a signal of cooling of the Russian economy. Vladimir Chernov is sure that this cannot be called a sign of a systemic crisis. Moreover, the economy is now entering a slowdown phase after a very high base in 2024 (when GDP grew by 4.9%. — Ed.) and a sharp overheating of a number of industries — services, construction.

The Russian economy was also strongly affected by the high key interest rate, which was 21% from October 2024 to June 2025, said Olga Gogaladze, an economist and expert on financial markets. Tight monetary conditions are already noticeably cooling demand, lending and investment activity, Vladimir Chernov added.

Photo: IZVESTIA/Yulia Mayorova

Meanwhile, the Bank of Russia is bluntly talking about cooling domestic demand and the fact that the economy is only approaching a balanced growth trajectory.

Olga Gogaladze believes that the most effective way to return the Russian economy to a trajectory of sustainable growth is to reduce the key rate faster. On March 20, the regulator reduced the rate by 0.5 percentage points to 15% per annum. In addition, according to Vladimir Chernov, it is necessary to support investments in productivity, infrastructure, logistics and import substitution. In general, in 2025, investments in fixed assets, according to Rosstat, decreased by 2.3% after an increase of 8.4% in 2024. It is also worth redistributing labor resources to more productive and technological industries, the specialist added.

Measure it seven times: The Central Bank may slow down the key rate cut due to the conflict in Iran

How will banks react to this and will loans become more affordable?

The crisis in the Middle East and the Russian economy

The meeting also discussed the current crisis in the energy market, which arose after the start of the operation of the United States and Israel against Iran. This effectively led to the closure of the Strait of Hormuz, through which about 20% of the world's oil and up to 30% of liquefied natural gas from the Persian Gulf countries were transported. After the escalation of hostilities, Urals brand prices at some point exceeded $ 106 per barrel, and Brent — $ 110. For comparison, on February 27, Urals was worth $59.

However, after US President Donald Trump's statement on March 23 that the United States and Iran had held productive talks over the past two days to end the conflict, the price of commodity futures declined.

Photo: TASS/Nic Coury

— Of course, for an effective macroeconomic policy, it is important to take into account all significant factors and respond in advance to external risks, and such risks are now acutely manifested in global markets and in the system of international economic relations. I am referring to the general tension in the world and the related fluctuations in energy markets, and the same thing is happening for many other goods. We are well aware of this. There are many goods and product groups in the energy chain," Vladimir Putin said.

In the opposite direction: will inflation in Russia decrease due to the war in the Middle East

Price growth has slowed down, and there is a chance that the conflict will slow it down even more noticeably.

Russia remains the largest exporter of hydrocarbons, and the volatility of the oil market is hitting Russia from both sides at the same time, said Anastasia Gorelkina, Deputy Chairman of the Board of Directors of the Siberian Business Union holding company, member of the Board of Directors of JSC Azot.

The escalation in the Middle East has sent prices up, and the instability of the situation is a pro-inflationary factor due to the rise in the cost of logistics and food in the world. Oil, which has increased so much in price, supports export earnings and the budget, said Vladimir Chernov. As Izvestia reported earlier, if energy prices remain high, the budget may receive an additional 3.5 trillion rubles by the end of the year. However, if the global economy slows down, it will hit demand for raw materials and external revenues.

Photo: IZVESTIA/Konstantin Kokoshkin

The President suggested that Russian oil and gas companies consider channeling additional revenues from the growth of global hydrocarbon prices to reduce their debt burden and repay debts owed to domestic banks. "That would be a mature decision," he said. The head of state is also waiting for the Cabinet to make a decision on current incomes in order to ensure the long-term balance of the country's budget.