Russia's Economic Slowdown in Q1 Attributed to Tax Adjustments, Fewer Workdays, and Harsh Weather—Central Bank Calls Factors Temporary
Russia's economy shrinks 1.8% in early 2026 amid harsh winter and tax shifts
Russia's economy slowed in the first quarter of 2026 due to adverse weather, fewer working days, and adjustments to tax changes, the Central Bank of Russia reported, describing these as one-off factors. As a result, the regulator maintained its GDP growth forecast for the year at 0.5–1.5%.
According to preliminary data, Russia's economic growth decelerated in Q1 2026, influenced by adaptations to recent tax reforms, a reduced number of working days, and unfavorable weather, the Central Bank stated.
"Operational data indicate that Russia's economic growth slowed in the first quarter of 2026, partly due to adjustments following tax changes. The decline was also driven by fewer working days and harsh weather conditions," the statement read.
Elvira Nabiullina, Governor of the Central Bank, explained at a press conference following the Board of Directors meeting that January and February had three fewer working days compared to the same period last year. This alone reduced annual GDP growth in Q1 by approximately 0.5 percentage points, regulators estimate. However, Nabiullina assured that the situation would shift in the second quarter. "This May and June, there will be three more working days than last year. This means a more accurate assessment of output dynamics can only be made based on first-half statistics," she clarified.
Among the weather-related challenges affecting economic performance, Nabiullina cited severe frosts and heavy snowfall, which disrupted construction activity. "The unusually harsh cold and snowstorms early this year led to downtime in Q1, but construction firms are expected to compensate for lost time in Q2," the Central Bank chief added.
The regulator emphasized that early-year economic trends were largely shaped by temporary factors. Given these circumstances, the GDP growth forecast for 2026 remains unchanged at 0.5–1.5%, the Central Bank's statement noted.
In January and February, Russia's GDP contracted by 1.8%—a steeper decline than anticipated by experts, analysts, and the government, President Vladimir Putin acknowledged during a meeting with Cabinet members on April 15. Manufacturing, industrial production, and construction all posted declines. "Analysts attribute the negative trend to calendar effects, weather conditions, and so-called seasonal factors. […] While these are objective circumstances, it is clear that they are far from the only drivers of business and investment activity in the country," Putin said, urging efforts to restore economic growth.
