Cars line up at a gas station in Moscow.Image: keystone
Jul 1, 2026, 9:14 amJul 1, 2026, 9:14 am
According to economists, the Russian economy is in crisis because of high interest rates, Ukrainian attacks and internet blocks. According to the forecast by the Vienna Institute for International Economic Studies (wiiw), economic growth will stagnate at 0.6 percent this year – after 4.9 percent and 1 percent in 2024 and 2025, respectively.
The main reason for the current situation is the excessively restrictive monetary policy of the central bank in Moscow, “which is strangling the economy” because it makes loans too expensive, said wiiw Russia expert Vasily Astrov. Investment activity fell by 14 percent in the first quarter.
Attacks on Russia’s energy sector
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The Ukrainian attacks on Russian energy facilities and the resulting problems with fuel supplies also damaged the economy, said Astrov. Internet blocks caused additional problems in the highly digitalized economy, it was said.
Nevertheless, from wiiw’s perspective, Moscow remains in a position to continue and finance the war of aggression against Ukraine. Next year, the institute expects growth of 1.3 percent.
Ukraine is struggling with the consequences of the Iran war
Experts predict an increase of 1 percent this year and 2.5 percent next year for Ukraine’s gross domestic product. Ukraine is not only suffering from the attacks on its energy facilities, but also from the effects of the Iran war, it was said.
The country is dependent on fuel and fertilizer imports, which have become more expensive due to the blockade of the Strait of Hormuz. The EU loan of more than 90 billion euros approved in April is stabilizing the Ukrainian economy, according to wiiw.
Robust growth in Central and Eastern Europe
Overall, the institute predicts robust growth in Central, Eastern and Southeastern Europe – despite the Iran conflict. The trend is being driven by private consumption, EU funds and investments in the defense industry. At the same time, the region’s industry, which is linked to Germany, is still struggling with the German industrial crisis, it was said.
In the eleven eastern EU countries, the wiiw expects growth of 2.2 percent (2026) and 2.4 percent (2027) – significantly stronger than the expected values for the Eurozone. (sda/awp/dpa)