Aleksandr Novak has cited record unemployment and rising incomes as signs of new growth.
Russia’s economy remains strong despite a contraction in the first quarter of 2026, Deputy Prime Minister Aleksandr Novak has said, citing unemployment, rising household incomes and improving business activity as evidence that the slowdown may be short-lived.
Russia’s GDP shrank by 0.3% year-on-year in the first quarter, marking the country’s first quarterly contraction since early 2023. The decline followed years of rapid expansion, with the economy growing by more than 4% in 2023 and 2024 before slowing to around 1% last year.
Novak told the business daily Vedomosti on Tuesday that the downturn is part of the normal economic cycle. “After a period of high growth, there is always a correction,” he said, describing the current phase as being consistent with “Design changes” below “Unprecedented pressure from sanctions.”
Russia has maintained its position as the world’s fourth largest economy by purchasing power parity (PPP) – which adjusts for differences in the cost of living across countries – since 2021, Novak said. Industrial output has increased by around 23% since 2022, he added, driven by import substitution and increased domestic production after many Western companies left the Russian market.
The deputy prime minister also cited historic unemployment and rising household incomes as signs of economic stability. Real disposable income has increased by 26.1% over the past three years, driven by growth in wages, social security payments, business income and property income, he said.
“Poverty has decreased to a low of 6.7 percent,” Novak said, referring to the data for 2025. He said unemployment is expected to remain around 2.3-2.4%, among the lowest levels in the modern history of the country.
Novak attributed the sharp decline in part to labor shortages and tighter monetary policy aimed at reducing inflation, but said growth is expected to return this year as price pressures ease and financial conditions gradually improve.
Novak’s comments were echoed by Economic Development Minister Maksim Reshetnikov, who told President Vladimir Putin on Tuesday that the economy was “hold well” despite obstacles and pressure from outside. The ministry expects GDP growth to reach 0.4% this year before increasing to 1.4% in 2027, Reshetnikov said.
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