By Dmitry Antonov and Darya Korsunskaya

MOSCOW, May 12 (Reuters) – The Kremlin played down a government economic growth forecast downgrade on Tuesday and gave no indication that it plans to punish officials for failing to boost growth, saying the government had taken the ‌necessary measures to ensure economic stability.

Deputy Prime Minister Alexander Novak unveiled some of Russia’s new macroeconomic forecasts in a late-night interview ‌with the Vedomosti business daily on Monday, in which the government slashed its estimates for gross domestic product (GDP) growth in 2026 to 0.4% from 1.3% and cut its estimate for growth ​in 2027 to 1.4% from 2.8%.

The announcement came just weeks after President Vladimir Putin summoned his top economic officials in the Kremlin, scolding them for slow growth and telling them to devise new ways to support the economy.

Kremlin spokesman Dmitry Peskov told reporters Putin was closely involved in economic issues and that Russia could “talk confidently” of macroeconomic stability despite volatility in global markets driven by the conflict in the Middle East. Another meeting with government officials on the economy ‌was expected this week, he said.

“Thanks to the measures ⁠being implemented by our government, we can confidently speak about macroeconomic stability and promising plans to modestly but steadily increase economic growth rates year after year,” Peskov said.

Russia’s $3 trillion economy, hit by the war in Ukraine, Western sanctions ⁠and high interest rates, contracted by 0.3% in the first quarter, marking its first quarterly decline since early 2023 after tax hikes at the start of the year and deep discounts on Russian oil linked to Western sanctions.

Novak was vague about the government’s plans to boost growth, underlining that domestic consumer demand will remain its ​main ​driver. He said the e-commerce sector in Russia has grown by 2.5 times from ​2022 to 2024 and that several other consumer-oriented sectors, including ‌tourism and the ‘experience economy,’ which offers memorable interactions, have significant growth potential.

BUDGET CONSOLIDATION

In a surprise move, Novak said the ministry projected that the oil price used for calculating budget revenue would remain at $59 per barrel in 2026. The projected oil price equals the so-called “cut-off” price, which determines what share of the budget’s oil revenue goes to the fiscal reserve National Wealth Fund.

The oil price is expected to stay at $50 per barrel for the next three years although many analysts had said Russia could be among the main beneficiaries of a rise in oil prices after U.S. and Israeli attacks on Iran. ‌The conservative oil price forecasts suggest the government wants to prevent its reserve fund ​from being depleted early, and to save any oil windfall for a rainy day.

Some ​analysts said the new forecasts are aimed at constraining state spending, ​which risks getting out of control after the budget deficit reached 2.5% of GDP in the first four months of ‌the year, well above the full-year 1.6% target.

“It is possible ​that a more conservative forecast could ​become a factor for budget consolidation,” Raiffeisen analysts said.

Novak said unemployment, which remains at record lows and is seen as a major constraint on growth, is expected to stay between 2.3% and 2.4% of the workforce. Analysts took this as a sign the central bank will ​not be in a rush to lower its ‌key interest rate from the current 14.5%.

“The combination of a lower economic growth forecast and simultaneously lower unemployment indicates expectations of maintaining ​rather tight monetary conditions in the Russian economy in the medium term. This, of course, does not inspire optimism,” Alfa ​Wealth analysts said.

(Writing by Gleb Bryanski; Editing by Andrew Osborn and Hugh Lawson)