Thu 23 July 2026:

President Vladimir Putin said Wednesday that the Russian economy remained resilient despite “external attempts to destabilize the fuel and energy sector.”

Putin said at a meeting on economic issues in Moscow that recent difficulties in the energy market were temporary and would not affect the broader economy.

Russia’s economy expanded 0.3% in May from a year earlier, citing preliminary estimates by the Ministry of Economic Development, according to Putin.

“The state of the domestic economy and its key sectors is stable. The difficulties being created for us in the fuel market are, of course, temporary and are not capable of influencing the overall economic dynamics,” said Putin.

He said GDP grew in the first five months of this year by 0.2%

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Putin said domestic demand from the government, businesses and households remained one of the main drivers of growth.

He said public finances remained stable, noting that the federal budget posted a surplus of 196 billion rubles ($2.5 billion) in June, supported by growth in oil-and-gas and non-oil-and-gas revenues.

Putin pointed to persistent regional budget deficits and ordered a new extension of loan repayments.

He reiterated that launching a new investment cycle and accelerating structural changes in the economy remained among the government’s key priorities, adding that additional measures would be discussed separately and again at a meeting of the Council for Strategic Development and National Projects in August.

Half a million Russians gone bankrupt

Half a million Russians declared bankruptcy last year as the country’s banking institutions bear the brunt of the cost of the war in Ukraine, a European intelligence report says earlier this month.

As the war in Ukraine continues into its fifth year, Russia’s Ministry of Economic Development has cut its GDP forecast for 2026 from 1.3 percent to 0.4 percent.

Rising household debt is one of the things creating the conditions for an “explosive” banking crisis, according to the European intelligence report, seen by Reuters. But experts say that while individuals are facing a cost-of-living crisis – and many face bankruptcy – a full-blown banking crisis is unlikely.

How has the war affected Russia’s economy?

It has transformed Russia’s economy by centring it on a wartime footing.

Growth, which last year slowed to 1 percent and is projected by Russian authorities at just 0.4 percent this year, is now mostly fuelled by defence production and state spending, as Western sanctions have cut the country’s exports – particularly oil – off from major foreign markets and investment. Russia has got around much of this by using a shadow fleet to export oil.

While the wartime economy has therefore proven stronger than many expected, there are signs of cracks. The Russian energy sector has taken a pounding under continued Ukrainian drone attacks on energy facilities.

A recent Gallup poll found that 60 percent of Russians believe their economic conditions are worsening, marking the first time in two decades that a majority has held that view.

Fifty-six percent of Russians say living standards are deteriorating, while 58 percent say it is a bad time to get a job where they live, even as unemployment remains low due to military recruitment and defence industry jobs.

“I would say, first, that it has caused the economy to function in greater isolation from the world than before – that is, the economy’s dependence on the outside world has become much lower,” Inozemtsev said.

“The economy attempted to pursue import substitution (successful in only a few industries), stopped relying on inflows of foreign investment, and its stock market no longer reacts to movements on foreign exchanges – in every sense, the Russian economy has become more closed.”

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