Russia’s parliamentary election on September 18–20 is expected to deliver another victory for the ruling United Russia party, but it comes as the country’s wartime economy faces growing pressure. Slower growth, a record post-pandemic budget deficit, high inflation and elevated interest rates are fuelling concerns among businesses and the public, even as President Vladimir Putin continues to describe the economy as stable.
The economic boom driven by military spending has weakened sharply. GDP grew by 4.1% in 2023 and 4.9% in 2024, while unemployment fell to a record 3.1%. Growth dropped to 1.0% in 2025, and the government expects just 0.4% growth in 2026, down from an earlier forecast of 1.2%.
At the same time, the budget deficit reached 6.5 trillion roubles ($75.9 billion) by the end of July, or 2.8% of GDP, the highest level since the pandemic. Inflation stands at 6.3%, above the Central Bank’s 4% target, keeping interest rates at 14% and increasing pressure on businesses. The banking sector is also under strain as sanctions limit access to international finance and Russians withdraw deposits at record rates.
Putin has responded with an upbeat economic message. At the Eastern Economic Forum, he said the economy was in a “stable situation” and that the budget deficit was “not critical”. He has also highlighted cumulative economic growth of 10% over the past three years and Russia’s relatively low government debt, which stood at 18% of GDP last year.
In July, Putin promised a new investment cycle, including rebuilding infrastructure damaged by Ukrainian strikes. Two state-backed economic plans announced in August also called for greater investment, regional development and measures against the shadow economy, with additional emphasis on artificial intelligence and robotisation.
However, concerns are increasingly visible among economists and business officials. VEB.RF chief economist Andrei Klepach resigned in August after publicly discussing the economic challenges created by the war. Sber executive Taras Skvortsov has warned about the impact of higher taxes and interest rates on companies and banks. Central Bank Governor Elvira Nabiullina has also expressed concerns about the war’s economic consequences.
The economic situation is unlikely to change the outcome of the election. With opposition party Yabloko barred from running, voters have limited opportunities to express anti-Kremlin sentiment through the ballot box. But polling by the NEST Centre indicates that economic concerns are spreading: three-quarters of Russians believe the war is damaging the economy, while more than half describe the economic situation as “not great”.
The Kremlin has limited room to respond. Cutting military spending or payments to soldiers and young families is unlikely, leaving higher taxes, additional borrowing and cuts to other spending as the main options. The longer-term challenge will therefore be whether Russia can adapt to slower growth, higher borrowing costs and a heavier tax burden while continuing to finance the war.
