Russian Economy Continues to Decline: New Data Indicates Serious Problems

The Russian economy has experienced a notable decline in February 2026, concluding the month with troubling negative indicators that have raised alarms among analysts and economists. Following a decrease in gross domestic product (GDP) of 2.1% in January, February saw an additional contraction of 1.5%. Consequently, for the first two months of the year, Russia's GDP has shrunk by 1.8% compared to the same period last year.

This information was disclosed by The Moscow Times, referencing data from Rosstat and the Ministry of Economic Development of the Russian Federation. As a result of this downturn, by March 2026, the aggressor's economy has lost all growth indicators that were recorded last year, when Rosstat estimated them at 1%.

“The risks of a cooling Russian economy are increasing,” notes Viktor Grigoryev, an analyst at Bank Saint Petersburg. According to Rosstat, out of 28 tracked industrial sectors, 22 reported negative results. Specifically, output from metallurgical plants plummeted by 15%, food production decreased by 2%, and clothing and footwear production fell by 11.1%. Even military sectors, traditionally considered stable, have also entered a recession: production of 'finished metal products,' which includes bombs and shells, declined by 1.9% compared to last year for January-February.

Wholesale trade turnover in Russia fell by 7.8% over the two months, while retail trade has nearly ceased to grow, showing only 0.3% in February and 0.5% since the beginning of the year. This marks the worst performance since spring 2023, according to economist Olga Belyenkaya from Finam: “Consumers have switched to 'saving mode' amid slowed income growth, high interest rates on loans, as well as increased value-added tax (VAT) and excise duties.” As a result, businesses are also forced to economize: according to Rosstat, profits in the economy plummeted by 30% at the beginning of the year, and large companies such as Lukoil, MMK, Severstal, and Rusal ended the previous year with losses.

Consequently, 80% of large businesses have cut or frozen investments, and three-quarters of them are experiencing a crisis of non-payments from counterparties. The aggressor's economy is under pressure from sanctions, a shortage of personnel, and new issues such as declining demand and budget expenditures. As noted in the report, the losses of the Magnit company are not an exception but rather confirm the overall trend: the high rate set by the Central Bank of Russia negatively affects the entire real sector.

Earlier reports indicated that Russian oil and gas revenues in 2025 plummeted to their lowest level since the onset of the coronavirus pandemic. By early 2026, the Russian budget may face a significant deficit due to a shortfall in oil and gas revenues, as acknowledged by the aggressor's government. Ukrainian intelligence has also stated that the financial condition of medium and large enterprises in Russia continues to deteriorate, showing an increase in imbalances within the corporate sector.

More than half of large companies in Russia ended 2025 with a decline in profits, reduced or completely frozen investment projects, and many are preparing to lay off employees. On February 24, 2026, it became known that around 300 companies in Russia are preparing to close. For the first time in history, 74 Russian regions found themselves in a financial hole, and a wave of mass business closures has begun in the country. The Ministry of Finance of Russia has acknowledged that the hole in the aggressor's treasury is growing at a record pace.

Rosstat has also acknowledged that over 17,000 Russian enterprises reported losses. VkusVill, the first of the major food retailers in Russia, has begun to scale back its retail network: by the end of 2025, the company closed 286 stores. Magnit, the largest retail chain in Russia by the number of stores, ended 2025 with a net loss. These figures indicate serious problems facing the Russian economy amid global challenges and internal difficulties.