At the beginning of 2026, Russian industry is showing clear signs of stagnation and a transition to a systemic crisis. Despite optimistic statements from official statistics, analytical centers close to the authorities note negative trends in the manufacturing sector and a rise in economic problems in key industries.
This is reported by Finway
Growth of Official Indicators and Real Dynamics
Official data from Rosstat indicates a 1.7% increase in industrial production in Russia for the period from December to February. However, according to estimates from the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF), this trend is misleading. After a brief upturn in December, production fell by 0.6% in January 2026, and in February, there was only a partial recovery. Overall, over three months, the sector contracted by 0.3%.
“Civil sectors of Russian industry accelerated their decline at the beginning of 2026,” notes an analytical center close to the Kremlin.
In terms of industry specifics, the situation is even worse: in February, the production of building materials decreased by 1.4%, ferrous metallurgy by 1.1%, and machine engineering by 2.2%. The overall contribution of major sectors, including oil refining and metallurgy, shows negative dynamics — minus 0.8%.
Decline in Business, Profits, and Employment
The PMI index for March from S&P Global fell to 48.3, the lowest level in three months, indicating further production contraction. The manufacturing sector has been shrinking continuously for thirteen consecutive months. Export demand has decreased for the fifth month, and purchasing activity is falling at the fastest rate in the last four years. The main reasons for this are a reduction in orders, rising fuel costs, and declining demand. Employment in the industry has been decreasing for the fourth consecutive month.
The metallurgy sector, which was once a pillar of the Russian economy, is experiencing a systemic crisis in 2025-2026. Profitability has dropped to 9.6%, which is below the costs of servicing loans. For example, Urals Steel from Novotroitsk, one of the largest producers of bridge steel and a contractor for state defense orders, reported a net loss of over 22 billion rubles instead of a profit of 11 billion rubles for the year. The tax service had to manually postpone debt collection to prevent the shutdown of the enterprise and the dismissal of 9,000 employees. At the same time, Severstal reported a fivefold decrease in profit and a 42% drop in EBITDA.
Small and medium-sized businesses are also under serious pressure due to falling demand and tax burdens. In 2025, nearly half of enterprises reported significant profit declines. In the trade sector alone, the number of companies decreased by 11,500, and in 2026, the disappearance of another 250,000 to 300,000 enterprises is expected.
There has also been a significant increase in wage arrears — over the past year, it has increased by 1.7 times and reached nearly 2 billion rubles. In 99% of cases, the reason for delays is the lack of funds in enterprises. Hundreds of thousands of workers were forced into downtime by the end of 2025.
The only support for the manufacturing sector remains state funding. However, it is unable to ensure sustainable growth: by the end of 2025, Russia’s state debt increased by 21% (6.1 trillion rubles) and reached 35.1 trillion rubles. Domestic debt rose by 29.1% to 30.7 trillion rubles. The decline in investment activity and domestic demand is accelerating the transition from stagnation to a full-fledged economic downturn.