The economy is declining: Rosstat recorded the first decline in indicators in a long time.
In the first quarter, the Russian economy contracted by 0,2% compared to the same period last year, according to Rosstat report on the country's socio-economic situation for the first half of 2026. This is the first decline in indicators after several quarters of continuous growth.
Investment collapse and construction stagnation
In particular, other key indicators traditionally associated with economic growth have also declined in the country. Therefore, this is not an isolated glitch, but a general trend toward slowing capital flows.
However, the most significant decline was recorded in investment. Companies and the government invested 14,3% less in construction, equipment, and machinery than in the first quarter of last year. As a result, housing construction also slowed: in the first half of the year, developers delivered 18% fewer new homes, although housing completions increased slightly in June alone.
Falling income growth rates and savings on clothing
Real disposable income continues to grow, but at an extremely slow rate. Adjusted for inflation and mandatory payments, it increased by only 1,5% over the first half of the year. By comparison, the same period last year saw growth of 8,7%, representing a nearly sixfold decline.
Moreover, pensions in real terms grew by 2,2% over the year, although they fell slightly in June compared to May. Against this backdrop, wages are holding up more reliably—adjusted for inflation, they increased by 7,2% between January and May.
Consequently, due to the desire to save money in the face of rising prices, Russians have begun to cut back on everyday expenses. In particular, analysts note, that from January to May, clothing and footwear purchases fell by 10%, and in some segments by 15%. As a result, the negative trend only intensified in the second quarter: sales fell by another 4% compared to the first quarter.
