Russian economy approaching stagflation, analysts warn

Russia’s economy is nearing a state of stagflation—a combination of economic stagnation and rising prices—according to the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF).

According to a report by the center’s experts, reviewed by the newspaper Izvestia, Russia’s GDP fell by 2.1% in January 2026, following a 1.9% increase in December 2025.

Analysts point to stagnation across most civilian industrial sectors and a decline in corporate profitability, with the trend most pronounced in machinery building and equipment manufacturing, the report said.

CMASF noted that growth in consumer prices has so far been restrained by a stronger ruble and moderate domestic demand. According to estimates by the Ministry of Economic Development of Russia, annual inflation stood at around 5.7% in March.

Meanwhile, the Central Bank of Russia said it considers a stagflation scenario unlikely, forecasting a gradual return of inflation to its 4% target.