If sanctions pressure intensifies and oil prices drop to $35 per barrel, the economy of the Russian Federation could experience its deepest decline since the 1990s. This forecast was released by the Central Bank of Russia in its “risk” scenario for future developments.
This is reported by Finway
Significant Losses in Export Revenues and Rising Inflation
According to the regulator’s estimates, in the most unfavorable scenario, the gross domestic product of the Russian Federation will shrink by 2.5-3.5% in 2026, and by another 2-3% in 2027. This will lead to a loss of $108 billion in export revenues in 2026 and an additional $51 billion in 2027. As a result, the total volume of foreign currency inflows will fall to $255 billion, the lowest level since 2005. For comparison, last year, Russia’s export earnings amounted to $434 billion, while this year they are expected to be $414 billion.
In this scenario, inflation in the country will accelerate to 10.5-12.5% – the highest level in the last two decades. Along with this, an increase in the Central Bank’s key rate to 17.5-19.5% is projected for 2026, with further growth to 18-20% in 2027.
The “risk” scenario takes into account the intensification of sanctions pressure and the widening discount on Russian goods, as well as a reduction in oil exports and production against the backdrop of falling global prices to $30-35 per barrel in 2026-2028.
Stagnation in Industry and Crisis in Retail
Alongside this, industrial sectors related to Russia’s military-industrial complex, which had shown dynamic growth since the onset of the large-scale war, are experiencing stagnation or even a decline in production for the first time in years. In particular, the production of metal products, which increased by 31.6% in 2024, decreased by 1.6% year-on-year in September 2025. The production rates of tanks and armored vehicles fell from 61% in August to 6% in September. Overall industrial growth dropped to 0.3% compared to 5.6% last year, and production decreased by 3.6% compared to December 2024.
Civilian sectors of the economy have been in decline throughout the year and, by September, had already turned negative by 1.1%. The recession has affected 18 out of 24 types of activities in the manufacturing sector, which account for nearly 80% of the country’s commodity output.
A serious crisis has also engulfed Russia’s retail sector: in the first nine months of 2025, only 27 new brands opened in the country – half as many as in the same period last year. The share of closed clothing stores in Moscow shopping centers reached 38%.