Russia’s Gold Reserves Shrink as Economy Contracts 1.8% Amid War and Sanctions

Russia’s Economy at the Start of 2026

According to Главком: By early 2026, the Russian economy had suffered major losses due to the ongoing war and international sanctions. Gross domestic product (GDP) dropped by 1.8%, and President Vladimir Putin publicly acknowledged the slowdown in economic performance. Higher taxes, including a value-added tax (VAT) increase to 22%, further worsened the business climate.

During the first quarter of 2026, 6% of businesses across the country shut down, signaling deep economic troubles. Customs revenues fell to their lowest point since the start of the full-scale aggression against Ukraine. In response, the Kremlin began selling off its gold reserves-a troubling sign of the state’s financial health.

Social and Economic Pressures

Even loyal opposition figures are voicing alarm over the situation. Communist leader Gennady Zyuganov warned that internal unrest could erupt if living standards keep declining. Entrepreneurs are complaining about the sharp rise in tax burdens, which makes operating a business even harder amid the ongoing economic crisis.

Government restrictions on communications and the internet are further disrupting online trade, a vital component of the modern economy.

• Shopping centers like Goodzone in Moscow’s suburbs are becoming half-empty spaces.
• Attacks on oil refining infrastructure are reducing Russia’s export capacity.

At the same time, the wealth of Russia’s richest people continues to grow, highlighting widening social inequality. Ordinary citizens face rising daily costs while wages remain stagnant, deepening their financial struggles.

“The situation in Russia’s economy shows the harmful impact of military conflicts and international sanctions on the country.”

Overall, the economic picture in Russia points to serious challenges as the country grapples with war and sanctions.

Amid the economic crisis and heavier tax burdens, the Kremlin must find ways to stabilize the situation to avoid internal upheaval and maintain political stability.

As the situation in Russia's economy deteriorates, the impacts are becoming increasingly evident. The recent report highlights a staggering decline in business activity, with 6% of companies shutting down amidst rising taxes and falling GDP. This alarming trend underscores the broader economic crisis facing the nation, prompting concerns over the potential for civil unrest and further financial instability.