The forestry industry of the Russian Federation is on the brink of survival due to a significant decline in production and considerable economic difficulties. The sector, which was recently an important source of foreign currency revenue, is rapidly losing ground following its exit from the European market.
This is reported by Finway
Production Cuts and Mass Layoffs
According to comparisons with 2021, timber harvesting in Russia has decreased by 13%, the production of sawn timber by 11%, and plywood production has dropped by a record 23%. The significant fall in demand has led many woodworking enterprises to become unprofitable, with several forced to cease operations. This negatively impacts primarily the regions where the logging industry was the main source of employment.
Although the Russian authorities constantly claim that the economy is “resilient to sanctions,” it is actually gradually collapsing.
Internal Problems and Social Consequences
In addition to the loss of external markets, the industry is facing serious internal challenges: high tax pressure, rising mortgage costs, declining demand for products in China, and stagnation in the construction sector. Under these conditions, enterprises cannot compete and are forced to implement mass layoffs. In forested regions, this leads to increased unemployment, reduced revenues for local budgets, and cuts in social benefits.
The deepening crisis in the forestry industry signifies for Russia not only a decline in exports and loss of foreign currency revenues but also an increase in social instability. Without the ability to sell raw materials in external markets, the country’s economy continues to weaken, as evidenced by problems in the coal industry, which is suffering losses due to a lack of foreign buyers.