Russia's Economic Pivot: Domestic Financing and Market Shift
MOSCOW, Aug. 19. Deputy Prime Minister Alexander Novak said the Russian economy has undergone a structural transformation, with a notable increase in domestically financed investment and a decisive turn toward the domestic market. Speaking at a meeting of the Council for Strategic Development and National Projects, Novak described the shift as central to the country's economic evolution.
"The key structural shift is that we have begun financing more investment from domestic sources, replacing external financing," Novak said. He noted that the share of intellectual assets in investment has grown to 7%, while public investment's share has fallen to 15.4%. State-owned companies, he added, remain major players, with the five largest responsible for over 15% of total investment. This trend is expected to continue as the government launches a new investment cycle.
Economic Growth and Global Standing
Russia's GDP has grown by more than 10% over the past three years, averaging about 3.3% annually, according to Novak. He attributed this performance, which he said exceeds the global average, to structural changes and a focus on sustainable development. The country now ranks as the world's fourth-largest economy by purchasing power parity, Novak said.
A central element of the transformation has been the declining role of net exports. Over the past five years, Novak noted, their share in the economy has fallen nearly threefold, underlining the shift toward domestic consumption and investment.
Incomes and Consumption
Novak highlighted progress in raising living standards, reporting that real incomes have grown by 26% over three years. Wages accounted for about 60% of this growth, he said, while the share of property income doubled amid high savings rates and interest rates. The government's key objective, he said, is to raise incomes for low-income groups and reduce inequality, with consumer demand serving as a primary engine of growth.
Regional Finances and Debt Relief
Finance Minister Anton Siluanov addressed regional fiscal health, announcing that regional fiscal recovery programs will have a budgetary impact of 800 billion rubles ($9.43 billion) in 2027. He also said a bill to postpone repayment of one-third of regions' budget loans from 2027–2029 to 2031–2033 will be submitted in the fall. The measure is expected to free up around 300 billion rubles ($3.54 billion) in regional budgets over three years.
Siluanov reported that regional budget revenues have risen by 6% since the beginning of 2026, exceeding 15 trillion rubles ($176.78 billion). Regional market debt has declined by 60 billion rubles this year, with 43 regions carrying no market debt and another 24 keeping it below 10% of own-source revenues.
Sectors and Trade Outlook
Addressing future growth areas, Novak outlined targets for tourism and creative industries, which are expected to account for 5% and 6% of the economy, respectively, by 2030. He also said the share of friendly countries in Russia's foreign trade turnover has reached 84%, reflecting a reorientation of trade ties.
Investment, a key driver of the new cycle, reached 23.3% of GDP last year, Novak said, adding that the government aims to encourage greater stock market participation by individuals and promote equity financing as an alternative to borrowing. A bill on investment partnerships has been submitted to the State Duma and passed its first reading, he said.