Though the latest data from Russia reveals that its economy has contracted by at least 1 % YoY , the Foundation argues the overall picture is much worse than this . More detailed analysis by the Moscow High School of Economics ( HSE ) reveals that in 2016 the economy contracted by 1.9 % , retail sales declined , the construction sector plummeted by -5.8 % and real disposable income fell . The reasons for this are that Russian exports for January to April 2016 averaged a staggering 31.3 % YoY ; the state budget is well in the red , forcing more significant dips into national reserves ; the investment climate rate is plummeting , and none of these current trends are expected to change . The Russian government is now considering significantly raising the VAT rate to 25 % from 18 % . If the country ’s economy declines over 2016 , even by as little as 1 % , Russia will have officially experienced a “ lost decade ” , and an ongoing downward trend will become long - term . But arguably, the overall picture is even gloomier than the economics mi­nistry data suggests. Russia 's leadership has an unrealistic hope that some external event will take place to revitalise the nation 's economy , and so is losing time instead of developing successful domestic policies .
Though the latest data from Russia reveals that its economy has contracted by at least 1 % YoY , the Foundation argues the overall picture is much worse than this . More detailed analysis by the Moscow High School of Economics ( HSE ) reveals that in 2016 the economy contracted by 1.9 % , retail sales declined , the construction sector plummeted by -5.8 % and real disposable income fell . The reasons for this are that Russian exports for January to April 2016 averaged a staggering 31.3 % YoY ; the state budget is well in the red , forcing more significant dips into national reserves ; the investment climate rate is plummeting , and none of these current trends are expected to change . The Russian government is now considering significantly raising the VAT rate to 25 % from 18 % . If the country ’s economy declines over 2016 , even by as little as 1 % , Russia will have officially experienced a “ lost decade ” , and an ongoing downward trend will become long - term . Russia 's leadership has an unrealistic hope that some external event will take place to revitalise the nation 's economy , and so is losing time instead of developing successful domestic policies .