Russia’s economy is expected to enter a full-scale recession as early as 2026.

Source: The Moscow Times, an independent Amsterdam-based news outlet

Details: This is evident from an analytical note published by the Kremlin-linked Centre for Macroeconomic Analysis and Short-Term Forecasting, titled "What do the leading indicators of systemic financial and macroeconomic risks show?".

Based on statistical data available as of July, the note assesses the probability of the Composite Leading Indicator (CLI) reaching critical levels. The CLI reflects the Russian economy’s entry into recession.

The note indicates that the CLI value was 0.1 in May compared to 0.07 in April, while the critical threshold is 0.18. 

The economists forecast that further growth in the CLI and "a breach of the critical level are inevitable".

The Centre identifies several factors contributing to the rising CLI, which is expected to send a recession signal by the end of this year. These include the compression of the current account balance in Russia’s payment balance, an increased likelihood of a banking crisis scenario, the sustained high interest rates on the Russian money market and other issues.

The note states that a transition to GDP decline will not be stopped even by a further reduction of the Russian Central Bank’s key interest rate, which "will not reverse the processes already under way". The Central Bank has already lowered the rate twice this year, from 20% to 18% at the end of July.

Analysts say the CLI will reach the critical level by October if the Central Bank maintains its key rate at the lower end of its 2025 forecast range, signalling a recession starting in 2026.

Background: Russia’s Central Bank has warned that the country’s economy could come to a standstill by the end of 2025.

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