Capital investment by businesses in Russia fell across 62 of the country's 85 administrative regions in the first half of 2026, according to a study by the National Rating Agency based on official data from Rosstat. The widespread downturn marks the sharpest geographical contraction of corporate spending in Russia in a decade.
Nationwide investment in fixed capital dropped by 9.9 percent year on year during the six-month period. By contrast, capital spending grew by 4.3 percent in the first half of 2025, before ending last year with a 2.3 percent contraction that saw investment fall in 49 regions. A territorial decline of similar breadth was last recorded in 2016.
Fixed capital investment measures corporate and state spending on physical assets, including industrial equipment, commercial facilities, and transport infrastructure. Rosstat, Russia's official state statistics service, tracks these figures across the federation, while the Moscow-based National Rating Agency monitors regional economic performance and creditworthiness.
Factors Behind the Downturn
The National Rating Agency attributed the decline to a reduction in government support for capital projects alongside deteriorating operating conditions for private firms. High borrowing costs, uncertainty surrounding market demand, and constrained corporate reserves have forced companies to delay new commercial projects.
Alexander Shirov, director of the Institute of Economic Forecasting at the Russian Academy of Sciences, said that the contraction in corporate investment was one of the primary drivers of the overall slowdown. The institute is a leading state-funded macroeconomic research center based in Moscow.
State funding is not the primary source of financing for Russian business projects. Citing Rosstat data, Evgeniya Trautman, an expert in the sovereign and regional ratings group at Analytical Credit Rating Agency, said that enterprise self-financing accounted for 57 percent of total investment in 2025, while government budget funds provided 15.4 percent. She added that the situation was further complicated by the end of an active investment cycle that ran from 2023 to 2025.
Impact Across Sectors and Regions
Tatyana Tirskikh, managing director at rating agency Expert RA, said that current economic conditions are hitting construction, commercial real estate, processing industries, retail trade, and small businesses hardest. Expert RA is Russia's oldest credit rating agency.
Despite the broader economic pressure, regional performance varied across the country. According to the study, 42 Russian regions retained their previous investment attractiveness ratings, 23 regions improved their standing, and 20 regions suffered downgrades.
Capital spending remains heavily concentrated in Russia's most economically attractive areas, which absorbed 67.5 percent of all regional investment in the first half of the year. Regions with moderate attractiveness received only about 3 percent. Moscow and Saint Petersburg retained their leading positions due to their large consumer markets, developed infrastructure, and deep pool of skilled labor.
Medium-Term Outlook and Recovery
In the medium term, the National Rating Agency expects Moscow Oblast, which surrounds the capital, and the industrialized Republic of Tatarstan along the Volga River to challenge the dominant position of the two main cities. The agency noted that Leningrad Oblast, Khabarovsk Krai in the Russian Far East, Orenburg Oblast in the Urals, and the industrial republic of Udmurtia also improved their positions.
A rapid recovery in capital investment is not expected before the end of 2026. The National Rating Agency said weak investment trends could persist, while Tirskikh estimated that a return to spending growth might require two to four quarters. Shirov estimated that investment dynamics could stabilize near zero growth in the third quarter.
