The Russian economy, which the Kremlin has shifted onto a “war footing”, has run into an industrial downturn. Russia’s Ministry of Economic Development has officially recorded negative dynamics for the first time in the past five years.
This is reported by Ukraine’s Foreign Intelligence Service.
According to the Russian agency’s forecast, by the end of 2026 industrial output will shrink by 0.2%, although growth of 0.6% had previously been expected. Over the first eight months of the year, the indicator remained at zero, and in August it fell by 0.8% year on year.
One of the main reasons for the decline, intelligence says, is weaker domestic demand due to high inflation, currency volatility and expensive credit. In addition, against the backdrop of the economic crisis, the state defence order is being reduced, leading to production cutbacks even at enterprises in the military-industrial complex.
The hardest hit have been sectors dependent on consumer demand and lending: car manufacturing, construction, the agro-industrial sector and the chemical industry.
According to the Foreign Intelligence Service, 65 regions of Russia cannot support themselves without financial assistance from the federal centre. Only 24 regions remain donors.
Intelligence also cites figures showing falling output in certain industries. In particular, Russian metallurgy has lost 5.2% of its volumes, the chemical industry – 3%, and garment manufacturing – 4.2%. Lift production fell by 20%, and freight railway wagon output – by 30%.
Production of petroleum products has been declining for the third month in a row. Oil extraction by the end of the year, according to intelligence estimates, could fall to its lowest level in the past 17 years.