Russian Economy Slides Into Crisis as Growth Stalls and Problems Mount
Russia’s economy is entering a period of stagnation under the pressure of rising military spending and a growing budget deficit, with the effects of the war against Ukraine increasingly being felt by ordinary Russians, UATV English reports.
The claim that Russia’s economy is continuing to grow rapidly is becoming increasingly difficult to reconcile with official statistics. Based on updated Rosstat data, Russia’s Ministry of Economic Development estimates that GDP grew by just 0.6% in January–June, compared with 4.3% in 2024.
Economist and former adviser to the President of Ukraine Oleh Ustenko said the Russian economy is now moving along a prolonged downward trajectory.
“The Russian economy is in a downward trend, and the question for many is how long this trend will last. Judging by everything we see, it will be prolonged. The economy will continue to decline for quite a long period,” Ustenko said.
Consumer finances are also deteriorating. According to the report, 16 out of every 100 Russians are already unable to repay their consumer loans, and the figure continues to rise.
Experts also point to potential new U.S. sanctions targeting Russia’s oil sector as another major threat to the Russian economy. On August 10, a bipartisan bill imposing tougher sanctions on Russia and Iran was introduced in the U.S. House of Representatives after previously receiving broad support in the Senate.
The proposed measures include tariffs of up to 500% on Russian goods, sanctions targeting Russian banks and the Kremlin’s shadow fleet, as well as possible tariffs of up to 100% on products from major buyers of Russian oil and gas, including China and India.
At the same time, Russia is increasingly struggling with the economic consequences of the war and sanctions. Businesses are cutting spending and investment plans, revenues from key export sectors are declining, while domestic demand is losing momentum.
The Ukrainian Foreign Intelligence Service said economic contraction is already visible across several Russian regions.
“Excluding extraction and public administration, a decline was recorded in the Northwestern Federal District at 1.5%, the Southern Federal District at 14.1%, the North Caucasus at 4.9% and the Siberian Federal District at 3.2%,” the agency said.
The extractive sector has also contracted across almost all federal districts, suggesting that Russia’s commodity-based economic model is coming under increasing strain.
The economy is additionally being affected by a fuel shortage and Ukrainian drone strikes on oil refineries and major logistics and warehouse facilities, including Wildberries sites.
Experts cited in the report estimate that infrastructure damage could push inflation 2–3 percentage points above previous forecasts, halt growth in real household incomes and contribute to the bankruptcy of thousands of small businesses.
Together, declining economic growth, falling export revenues, rising military expenditures, inflationary pressure and disruptions to fuel supplies are increasing the strain on Russia’s wartime economy.
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16 of August 2026
