Произ
Russia’s economy is increasingly strained, with high interest rates and declining revenues impacting businesses and felt by the population. The situation raises concerns about the Kremlin’s ability to sustain its military campaign in Ukraine.
Despite assertions by Donald Trump that Russia is gaining the upper hand in its war against Ukraine, economists say the country’s position is weaker than ever. The Kremlin has largely depleted its foreign currency reserves and borrowed funds used to finance increased military spending, with larger problems looming.
The outlook is expected to worsen as new, stringent sanctions targeting Russia’s oil sector exacerbate a liquidity crisis that could lead to a banking crisis next year, even as President Wladimir Putin maintains a hard line in negotiations to end the conflict.
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“A banking crisis is possible… a default crisis is possible. I don’t want to think about a continuation of the war or an escalation,” said a Russian official, speaking anonymously about sensitive matters.
Sanctions and Budget Crisis
During a meeting with his German and British counterparts in London last week, French President Emmanuel Macron stated that the recent sanctions were weakening the Russian economy. “We must continue these efforts and maintain the pressure,” he said.
The new sanctions, imposed by the U.S. Treasury Department in October against Russia’s two largest oil companies, Rosneft and Lukoil, are increasing pressure on the budget and energy sector. Moscow is being forced to accept increasingly large discounts of more than $20 per barrel for its Urals crude.
“The upstream oil industry is sliding into a crisis, and the recent sanctions will only accelerate this,” said Craig Kennedy, former Vice Chairman of Bank of America Merrill Lynch, now at the Davis Center for Russian and Eurasian Studies at Harvard University.
Declining State Revenues and Record Military Spending
Oil and gas revenues, crucial for the budget, are expected to decline by 49 percent in December compared to the previous year, according to Reuters, due to the new sanctions and falling oil prices. This further exacerbates the budget deficit, despite military spending reaching a record $149 billion in the first three quarters of this year.
The new sanctions are “an aggressive step that brings further problems,” Kennedy added. “You can raise taxes on the average Russian further, or borrow more money to cover the growing deficits. But you have to ask yourself: does that strengthen or weaken my negotiating position? It certainly makes Russia look weaker.”
Rising Costs
Even before the new sanctions more strongly impacted corporate and household income, the Russian economy was heading toward a recession. The central bank was forced to raise interest rates to record highs of over 20 percent to curb galloping inflation. The government had benefited from high military spending and a boom in corporate lending in the first three years of its war, while import prices soared due to sanctions.
The high interest rates – now lowered to 16.5 percent – have begun to curb inflation, but have also depleted corporate profits and cash reserves. As a result, investment has stalled, production has fallen in some sectors, and defaults have risen sharply across the economy.
The Russian economy “benefited from many positive factors such as high global commodity prices and the expenditure-driven boom. Most of these factors have now disappeared, which is why Russia is currently in its worst situation since the start of the war,” said Janis Kluge, an economist at the German Institute for International and Security Affairs.
Sanctions Taking Effect
In a recent video conference for the independent Russian media outlet The Bell, economist Alexandra Prokopenko said that despite statements from Russian leadership, the costs for the economy are rising and the sanctions are having an effect.
The economy “is frozen and fundamentally does not seem sustainable to me,” said the former central bank advisor. “The best analogy would be a car idling with the engine overheating… The car is neither moving forward nor backward, but the longer it stands there, the more damage accumulates under the hood.”
Defaults
Economists say Russia’s massive expansion of corporate lending in the first three years of the war, combined with the persistently high interest rate environment, has led to deep problems in the banking system.
According to official data from the central bank, the share of non-performing loans in the corporate lending sector is almost 5 percent, still far from a level that would trigger a crisis. However, this does not include loans to the defense industry, for which regulations have been relaxed.
Loans to the defense sector account for almost a quarter of all ruble-denominated corporate loans, totaling just over $202 billion, according to an analysis of central bank data. “It’s a large black pool of poorly regulated, opaque debt sitting in the middle of the banking system,” said Kennedy.
Problems in the Banking and Energy Sectors
Russian bankers themselves sounded the alarm earlier this year about the growing number of hidden bad loans in the banking system. Alexander Shokhin, chairman of the influential Russian Union of Industrialists and Entrepreneurs, publicly warned that many companies were in a “pre-Insolvenz” situation.
Even based on official data, a think tank connected to the Kremlin, the Center for Macroeconomic Analysis and Short-Term Forecasting, stated this month that Russia could face a systemic banking crisis by October. This would happen if non-performing loans continue to rise and depositors begin to withdraw money en masse.
Russia also heavily relied on tax revenues from its largest energy companies to fund its war machine. This month, Putin granted tax breaks to Russia’s two largest energy companies, Gazprom, the state-owned gas monopoly, and Rosneft, the Kremlin’s oil giant, both of which are under growing financial pressure.
Crises at Gazprom and Rosneft
Gazprom, once the cash cow of the Russian economy, reported a net loss of $12.9 billion last year, according to Russian accounting standards, after losing its main market in Europe since the start of the war. The company has depleted its cash reserves, which stood at $27 billion at the beginning of 2022 and now amount to only $6 to $8 billion. At the same time, it has apparently taken on more than $20 billion in additional debt.
The Russian oil industry is also facing a growing crisis. Even before the new blocking sanctions were imposed, Rosneft reported a 70 percent drop in its net profit to $3.6 billion for the first three quarters of this year compared to the previous year, due to falling oil prices. Across the oil industry, a combination of increasingly stringent sanctions restricting access to urgently needed equipment and limiting opportunities for selling crude oil is forcing many companies to focus only on extracting oil from the most accessible wells – and could force them to shut down others.
“There are only a limited number of buyers interested in sanctioned oil,” Kennedy explained. “Looking at the numbers, it appears that between 1.6 and 2.8 million barrels are left unsold daily. Currently, a lot of unsold oil is stored on tankers on the water.”
Wider Problems
The economic problems in Russia are beginning to affect the wider population. According to a recent report by the Russian state bank Sberbank, consumers have begun to tighten their belts: in early December, they spent 8.7 percent less on clothing, 8.8 percent less on household goods, and 5.9 percent less on Gesundheit and beauty products.
High interest rates and declining incomes have put companies across the country in crisis – and many are passing the problems on to workers. They are either laying off staff, reducing working hours, or simply not paying wages.
In Nizhny Tagil, dozens of shift workers with orange hard hats at the Novoleks copper mine and processing plant recorded a video this month complaining that they haven’t been paid for two months. The Izvestia newspaper reported on dozens of similar cases involving at least 34 companies.
According to the Russian statistics agency Rosstat, overdue wages increased almost threefold year-on-year to more than $27 million as of October. More than 26,000 complaints have been filed with the Russian labor authority this year.
Last month, 300 workers building a nuclear reactor in the Uljanovsk region went on strike, complaining that they hadn’t been paid for two months.
“People simply have no way to pay their loans anymore. A lot of debts have accumulated,” said a spokesman for the workers, standing with dozens of others in a video message to Alexander Bastrykin, the head of the Russian Investigative Committee. “The living conditions at our workplace are also terrible. The toilets are overflowing and not being emptied.”
Regional Impacts and Outlook
The Russian coal mining region of Kuzbass is one of the hardest hit. According to regional governor Ilya Seredyuk, 18 of the 151 coal companies have ceased operations, and another 30 are in a critical situation. The Russian metallurgy sector is also in decline despite high demand from military production facilities.
Despite the growing difficulties facing the population, few in the Moscow elite expect the economic problems to lead to social unrest or influence Putin’s calculations.
“The increasing economic problems will not lead to social or political problems. But next year will be the first difficult year of the military operation,” said a Russian scientist close to high-ranking diplomats.
Robyn Dixon is a foreign correspondent and has reported from Russia for a third time, having previously worked there as a reporter for nearly a decade since the early 1990s. She joined The Washington Post as Moscow bureau chief in November 2019.
Catherine Belton is an international investigative journalist for The Washington Post covering Russia. She is the author of “Putin’s People,” which was named Book of the Year by the New York Times critics and also chosen as Book of the Year by the Times, the Economist, and the Financial Times. Belton previously worked for Reuters and the Financial Times.
This article first appeared on December 22, 2025, at Washingtonpost.com – and is now available to readers of IPPEN.MEDIA portals in translation as part of a cooperation.
