The Russian economy has been performing better than anticipated and oil prices continued to beat expectations, but businesses should expect a difficult winter for the economy with weak demand continuing in November amid reduced mobility from the latest surge in COVID-19 cases. Around 66% of the economy continues to function amid current COVID-19 conditions – the production of raw materials, food, social services, and construction – as the government seeks to avoid another lockdown.

Our Central and Eastern Europe analysts, Mark McNamee, Director for Europe Research, and Martin Belchev, Senior Analyst for Central and Eastern Europe, are keeping a close eye on the Russian economy to bring you the latest developments and insights on how to manage the shifting environment following the peak of COVID-19. Here is what we expect for the remainder of 2020 and moving into 2021.


New COVID cases further accelerated at the end of November, beyond 20,000, raising major concerns of another lockdown, which Russia has so far avoided unlike most other major European nations. Moscow Mayor Sergey Sobyanin has already put new restrictions on bars, clubs, and restaurants, effective through January 15, and New Year’s celebrations have been canceled. There is hope that notably tighter restrictions can be avoided, as mobility (directly related to case surges) has contracted drastically since mid-October, and Yandex searches for COVID-related terms began declining by mid-November. Firms should brace for a difficult period ahead, along with some additional restrictions, and focus on online channels to capture demand.

Sanctions momentum continues, with the US considering new sanctions on private firms working with the militaries in Russia and China, which could impact the Russian aviation industry. More broadly, sanctions threats against Russia in the last days of Trump’s term serve as a reminder of the ongoing, bi-partisan support for more sanctions under President-elect Joe Biden, with only their timing, severity, and targets in question. Biden may delay, moderate, and/or direct them against specific oligarchs in 2021, particularly as he seeks to establish a working relationship with Russia over arms control.


The government approved the extension of critical support measures to small businesses—loan holidays, moratorium on bankruptcies, and preferential lending rates—through the end of the year. With a weak economy in Q1, firms should monitor whether these measures are extended again.

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