Economic growth remains sluggish in July

RUSSIA ECONOMICS - In Brief 03 Sep 2026 by Evgeny Gavrilenkov

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Recent economic data came as no surprise. After Rosstat reported a 0.6% y-o-y GDP increase in 1H26, it noted that in July the combined output of the five basic sectors (industry, agriculture, construction, transportation, and trade) grew by 0.8% y-o-y, bringing growth for 7M26 to just 0.1% y-o-y. While July showed slight improvement, it wasn’t a game changer. Industry rose 0.4% y-o-y in July (0.1% in 7M26), agriculture fell 4.1% (down 1.6% in 7M26), retail sales climbed 5.3% (5.4% in 7M26), cargo transportation rebounded 2.1% (for a smaller 0.3% decline over 7M26), and construction grew 0.8% in July but remained down 3.9% for 7M26. Investments dropped 9.9% y-o-y in 1H26. GDP still looks on track for about 1.0% growth this year, with moderate household credit expansion but stronger corporate credit growth. As of July 1, household credit was up 3.3% YTD (0.5% m-o-m in June), while corporate credit rose 7.7% (3.0% m-o-m in June). Corporate lending outpaced inflation, while household lending lagged. Slower household credit growth coincided with slower real wage growth (3.4% y-o-y in July) and real pension growth (2.2%), suggesting weaker income growth from other sources like entrepreneurship, along with likely higher taxes, as real disposable incomes rose just 1.5% y-o-y in 1H26 (the most recent available data). Rosstat’s surveys show that the business confidence index has stayed mostly negative since 2Q25. While a weaker ruble could boost local production in some areas, an overall rebound seems unlikely anytime soon, as the current economic model leans more on state banks, state-owned companies, and other suppliers meeting the state’s special needs. With ongoing uncertain...