Real incomes in Russia rose by 26% over the past three years. This is the fastest growth rate in two decades, driven by increases in wages, social payments, business income, and property income, Deputy Prime Minister Alexander Novak told Vedomosti. The poverty rate fell to a historic low of 6.7%.
Russia’s economic growth under sanctions
Russia’s real GDP increased by more than 10% over 2023–2025, or about 3.3% per year. Novak stressed that this is significantly above the global average and allows Russia to retain 4th place among the world’s largest economies in purchasing power parity terms. This position has been maintained since 2021, despite the exit of many foreign companies and mounting sanctions pressure — the EU has already introduced 20 sanctions packages. The gap in per capita incomes with developed economies has also narrowed.
The Deputy Prime Minister also reported broad-based growth in domestic production across nearly all sectors, from machine tool manufacturing to tourism. In manufacturing, output in 2025 was nearly 23% higher than in 2022. Production of computer equipment and fabricated metal products nearly doubled, pharmaceuticals grew by 40%, and electrical equipment by 30%. Defense and security-related industries also saw significant expansion.
Labour market, incomes, and social indicators
A combination of factors led to rising demand for labour and a decline in unemployment to a historic low of 2.2% on average in 2025. Over the past three years, real disposable incomes increased by 26.1%, driven by wages, social benefits, entrepreneurial income, and property income — the fastest growth rate in 20 years.
Real wages rose by 23.9% over the same period, including 4.4% in 2025. The poverty rate fell to 6.7%, reaching a historic low by the end of 2025.
In March, Labour Minister Anton Kotyakov said average wages in Russia rose by 13.5% in 2025, RBC reports. According to Rosstat, the average monthly wage exceeded 100,000 rubles for the first time, reaching 100,360 rubles. The share of people earning above this level increased from 16.7% in 2024 to 22.3% in 2025.
Structural constraints and macroeconomic risks in Russia
Novak pointed to a structural labour shortage and a tightening labour market. Employment is at record levels, with very limited unused labour resources remaining. This creates pressure for reallocating workers toward sectors with higher contribution to GDP.
Additional risks include changes in the structure of budget spending and disruptions in global supply chains for goods, services, capital, and labour. According to the government, sanctions imposed since 2022 reduce trade efficiency and weaken economies of scale.
Authorities are pursuing a moderately tight monetary policy while simultaneously developing a supply-side growth model by supporting production of goods and services. A key priority is achieving technological self-sufficiency in machine building, energy engineering, and transport equipment.
The Bank of Russia uses the key interest rate to influence aggregate demand, as well as consumer and investment activity. The policy objective is to keep annual inflation close to 4%. Maintaining a moderately tight stance implies slower economic growth over a certain period, with duration depending on the imbalance between supply and demand.
Outlook for 2026
In 2026, the government expects real disposable incomes to rise by 1.6%. Unemployment is projected to remain low at 2.3–2.4%. The working-age population is expected to continue growing through 2030, mainly due to younger cohorts and pre-retirement-age citizens with lower employment rates.
Together with businesses, government agencies have developed 17 labour productivity programmes. Special attention is given to the public sector, where competition for skilled workers with the private sector is intensifying. The overall goal of improving labour market flexibility is to reallocate workers toward sectors facing labour shortages.
In Q1 2026, Russia’s GDP fell by 0.3% year-on-year. The budget deficit reached 5.9 trillion rubles (around $76.6 billion) in the first four months, exceeding the annual target. Consumer activity growth is expected to slow from 4% to 1.2%, followed by a gradual acceleration to 3%.
The CMASF analytical center lowered its 2026 GDP growth forecast from 0.9–1.3% to 0.5–0.7%. The government’s official forecast remains at 1.3%, but may be revised.