Russian Economy Shrinks for First Time Since 2023 as January GDP Drops by 2.1%
united24media.com
Russia’s GDP fell 2.1% year on year in January as consumer spending cools after a VAT rise; construction, metals and autos posted declines.

cross-posted from: https://mander.xyz/post/48460929

Russia’s economy has entered a phase of contraction for the first time since March 2023, with a 2.1% year-on-year drop in GDP for January, compared to the same month in 2025, The Moscow Times reported on March 5, citing Russia’s Ministry of Economic Development.

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The Ministry attributes the downturn to several factors, including a two-day reduction in the working month and extreme cold weather, which had a notable impact on industrial output. Specifically, the construction sector saw a sharp 16% contraction, a stark contrast to the previous year when it grew by 6%, thanks to an unusually warm January.

However, economists caution that even when accounting for these external factors, Russia’s economy appears to be stagnating rather than growing. Underlying economic activity has slowed down across most major sectors.

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One of the primary drivers of the economic downturn is a significant weakening of consumer demand. In 2025, consumption accounted for 51.1% of Russia’s GDP, but early data for 2026 suggests that demand is faltering. This stagnation comes on the back of a VAT hike, which has added pressure to household finances.

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Business Confidence in Russia also decreased to 0.40 points in February from 0.70 points in January of 2026, according to the Russia’s Federal State Statistics Service.

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  • NateNate60@lemmy.world
    9·
    1 day ago

    I am no expert, but these are my guesses:

    1. Exporting energy, in many cases, involves the movement of physical goods. Global shipping has become riskier (and therefore more expensive) because of the deteriorating geopolitical situation.
    2. Once a country installs renewable energy capacity, that capacity stays forever and essentially never degrades. Who’s ever heard of a wind farm getting torn down? Renewable energy such as hydroelectricity, solar, and wind are getting cheaper and cheaper by the year as technology improves, making it an attractive alternative to fossil fuels.
    3. Countries are starting to become more cognizant of their energy sovereignty. Developing domestic energy production is now an important national security concern worldwide. Nobody can shut off your sunlight, your rivers, or your coal mines, but unfriendly neighbours can threaten to cut off your supply of imported oil or natural gas.
    4. Many large exporters of fossil fuels happen to be on the receiving end of geopolitical turmoil. Russia is still balls-deep in shit in Ukraine and their biggest customers (China and India) are demanding discounts as a result of the international reaction to that. Venezuela just had its president kidnapped. Iran and the UAE are being bombed to smithereens by American and Israeli ordnance.