The Ministry of Economic Development has updated its baseline scenario for Russian economic development through 2029 and significantly worsened its investment forecast. Evgeny Goryunov, Head of the Monetary Policy Department at the Gaidar Institute, explained in a commentary to Forbes, why the decline in investment should not yet be seen as a sign of economic overcooling.
The Ministry of Economic Development's new forecast expects investment to decline by 5.4% in 2026 and grow by only 0.2% in 2027, compared to 2% in the previous estimate. At the same time, the Ministry raised its inflation forecast and slightly improved its GDP growth expectations.
According to Evgeniy Goryunov, the term "overcooling" has a narrower meaning in macroeconomics rather than simply a decline in output or investment.
"Any recession or investment pause cannot be called overcooling. It is about a situation where output falls significantly below the level consistent with sustainable, balanced growth. Given that investment grew very rapidly in 2023–2024, its subsequent decline does not indicate as such a critical economic situation. Considering a longer time horizon, it is more likely to be a correction after a period of rapid growth. Therefore, it is premature to call this an excessive decline in investment or economic overcooling," the economist noted.
Evgeniy Goryunov also linked the slowdown in output to the impact of tight monetary policy. However, he stated that the actions of Central Bank are driven not only by the need to contain current inflation, but also by factors limiting potential GDP growth. In this context, the slowdown in output and investment may reflect the economy's progress toward a more sustainable path.