War burden slows Russian economy despite oil-price boost

The 1.0 growth in the three months to the end of September compared to the same period last year, as calculated by the official statistics agency Rosstat, beat the 0.6 forecast made by the economy ministry last month. — AFP pic

First Published: Saturday, 14 Nov 2026 10:10 AM MYT

MOSCOW, Nov 14 — Russia’s growth rate slowed to one per cent in the third quarter, preliminary official data showed yesterday, as the war in Ukraine held back the economy.

The 1.0 growth in the three months to the end of September compared to the same period last year, as calculated by the official statistics agency Rosstat, beat the 0.6 forecast made by the economy ministry last month.

But that was less than the 1.3 per cent expansion the Russian economy managed in the second quarter.

The Russian economy had contracted 0.2 per cent in the first quarter, its first quarterly contraction in three years.per

The Kremlin has spent heavily to wage war in neighbouring Ukraine.

At first this boosted Russia’s economic growth.

But it also set off inflation, caused a lack of labour in non-military sectors and led to a slump in private investment, which has hobbled growth.

Western sanctions and Russian measures against foreign firms also held back private investment and economic activity.

The surge in oil prices following the US-Iran war provided Russia financial respite by bringing in additional revenue for its petroleum exports, but Ukrainian attacks on energy infrastructure forced the Kremlin to restrict exports to ensure sufficient domestic supplies.

The war has also strained Russian government finances.

Every year since the start of the offensive in 2022 Russia has posted a budget deficit.

Over the first 10 months of the year it ran a deficit of 2.3 per cent of GDP, according to finance ministry estimates published at the start of the week.

While it initially spared ordinary Russians from the financial burden of the war, the government increased the value added tax (VAT) rate by two per cent this year.

Nevertheless, Russia remains one of the lowest indebted developed countries in the world with debt equal to around 19 per cent of annual economic output in 2026, according to IMF estimates.

Moscow also has a sovereign wealth fund with nearly US$46 billion (RM188 billion) in liquid assets and worth around US$157 billion overall. — AFP