Russia's Q2 GDP Grows 1.3% Year-on-Year Driven by Domestic Demand, but Budget Deficit Widens to 6.5 Trillion Rubles
On August 12, 2026, Russia's statistics agency reported that Q2 GDP grew 1.3% year-on-year, driven by domestic demand, exceeding the ministry's 0.9% forecast.
RUSSIA,ECONOMY
Global N Press
8/12/20261 min read
On August 12, 2026, Russia's Federal State Statistics Service released preliminary estimates showing that Russia's GDP grew by 1.3% year-on-year in the second quarter of 2026, driven by domestic demand and exceeding the Economic Development Ministry's forecast of 0.9%. Economic Development Minister Maxim Reshetnikov stated that despite continued external pressures and constraints on some sectors, the growth recovery that began in March is continuing. The key drivers of domestic demand growth included retail trade turnover (up 7.2%), food service turnover (up 6.2%), freight turnover (up 2.5%), wholesale trade turnover (up 2.4%), and manufacturing (up 2%). Meanwhile, declines were recorded in mining (down 1.9%), construction (down 1.6%), and agriculture (down 1.5%).
Despite these signs of economic recovery, Russia's fiscal position is under significant strain. The federal budget posted a deficit of 724 billion rubles in July 2026, following a surplus a month earlier, bringing the cumulative budget deficit for the first seven months of the year to 6.5 trillion rubles, or 2.8% of GDP. Analysts noted that although tensions around the Strait of Hormuz have boosted energy revenues, the Kremlin's continued ramp-up of spending on its war in Ukraine has sharply widened the budget gap. Additionally, sustained Ukrainian drone strikes on Russian oil refining facilities, international sanctions, and domestic fuel supply shortages continue to exert pressure on the Russian economy.
