Sberbank has cut ​its gross domestic product growth forecast for ‌Russia to 0.5 per cent to 1 per cent from between 1 per cent and 1.5 per cent, after a poor first-quarter economic performance.

Russia’s ​largest bank updated its forecasts ahead of ​the release of a preliminary first-quarter GDP ⁠estimate by the Economy Ministry on Wednesday ​and preliminary first-quarter data release by the statistics ​agency on May 15.

The Russian economy contracted by 1.8 per cent in January and in February due to high interest rates, ​tax hikes, a strong rouble and weak ​prices for Russian oil before the Iran war began.

“The situation ‌in ⁠the first quarter of the Russian economy was challenging against the backdrop of tight monetary conditions,” said Sberbank’s Deputy CEO Taras Skvortsov.

Russia’s mining and ​manufacturing sectors ​were hit ⁠hardest, while there was also a significant slowdown in consumer spending, affecting ​retail trade, Skvortsov said, adding that ​the ⁠construction sector had stagnated in the first quarter.

Sberbank forecasts inflation in 2026 at between 6 per cent and ⁠6.5 per cent, ​above the central bank’s prediction ​of between 4.5 per cent and 5.5 per cent.