The Russian industry is on the brink of the most serious crisis in recent decades. The tightening of international sanctions, rising interest rates, and a significant economic slowdown following military expansion have led to a sharp decline in sales and optimism among leading enterprises in Russia.
This is reported by Finway
Decline in Production and Job Cuts
According to a study by the Institute of National Economic Forecasting of the Russian Academy of Sciences, this year’s demand for products from large industrial companies in Russia has reached its lowest level since 1998. Business estimates have already surpassed the anti-records of the crisis years of 2009 and 2015, when the Russian economy suffered from the global financial crisis and the first sanctions following the annexation of Crimea.
Production plans for enterprises across the country have been reduced to a minimum over the past 16 years, and the industrial optimism index has fallen to the level of 2009. After two years of rapid growth driven by state investments in the military-industrial sector, GDP growth has nearly come to a halt, and the industry has entered a phase of recession.
In November, according to official data, industrial production volumes decreased by 0.7% year-on-year. The most significant losses were in metallurgy (down 4.1%), the chemical industry (down 1.7%), and machine engineering (down 5.4%). For the first time in 15 years, food production began to decline – by 0.8%.
Particular segments of the industry have been hit hardest: tractor production decreased by 61.6%, bulldozer production by 53.7%, elevator production by 37.2%, and the production of passenger cars was cut in half. The automotive industry has returned to the worst results of 2022, losing 34.1% of its volumes.
Losses, Company Reductions, and Dependence on the Military Sector
For the first time since the beginning of the full-scale war against Ukraine, the number of companies in Russia has decreased: from January to December, the number of registered organizations fell by 67,400, which is a 2.08% decrease year-on-year. From January to September 2025, the total losses of Russian enterprises increased by almost a quarter, reaching 6.52 trillion rubles ($83.64 billion). The number of companies operating at a loss amounted to 18,400, which is 11% more than last year.
Due to declining demand and worsening economic conditions, the largest industrial enterprises are forced to reduce working hours or staff numbers. At least six companies in the mining, transportation, and machine engineering sectors have shortened the workweek in an attempt to cut costs without mass layoffs.
“The largest Russian industrial companies are forced to reduce working hours or the number of employees amid an economic slowdown, stagnation of domestic demand, and falling exports. At least six companies in the mining, transportation, and transport machine engineering sectors of Russia, including major industrial giants, have shortened the workweek to reduce labor costs without laying off employees.”
The worsening financial situation has also affected debt burdens: one in six large companies has struggled to manage debt repayments. Two-thirds of the GDP growth in Russia is linked to the activities of the military-industrial complex, where enterprises are operating at an intensified pace to supply the army fighting against Ukraine.
Since 2022, the Russian budget has spent 42 trillion rubles ($542 billion) on the military, arms procurement, and security forces. According to NATO, ammunition production in Russia has increased more than elevenfold, and bomb production has reached leading positions globally, as repeatedly stated by Russian leadership.