LONDON, February 26. /TASS/. The European Bank for Reconstruction and Development (EBRD) has downgraded its outlook on Russia’s GDP growth for 2026 by 0.5 percentage point to 0.8%, the bank said in a report.

The forecast for 2025 has been lowered to 1%. Previously, it was expected at 1.3%. In 2027, analysts at the London-based EBRD expect the Russian economy to grow by 1%.

With oil and gas revenues declining by a quarter in 2025, the country’s budget deficit has risen to 2.6% of GDP. In response, the authorities raised the base VAT rate from 20% to 22% effective January 1, 2026, which could temporarily accelerate inflation. Analysts expect real GDP growth to slow to 0.8% in 2026 before recovering to 1% in 2027. That said, downside risks associated with falling oil prices and further economic sanctions persist, according to the report.

Russia has been a member of the EBRD since 1992. In 2014, following the introduction of sanctions against Russia by the European Union and the United States, the bank suspended investing in Russian projects.