What is Happening in Russian Economy

What’s happening with the Russian economy:

Automotive industry

Sales of passenger cars and trucks have dropped due to high loan interest rates. Tens of thousands of vehicles are stuck at the car factories’ warehouses with no buyers in sight.

In 2024, KAMAZ sold almost one-third fewer trucks than in 2021. The plant incurred a net loss of 3.4 billion rubles ($42.2 million), revenue fell by 8.8%, and profit from sales decreased 15-fold.

KAMAZ workers even had to be moved to a four-day work week. But while in Europe this is done to boost productivity and take care of employees, in Russia, it’s aimed at cutting production and optimizing costs. Other machine-building factories that produce civilian equipment and can’t find buyers are also reducing the work week.

Agricultural machinery industry

Production of farm machinery has collapsed by 27%. Farmers don’t have the money for new combines, loans are unaffordable, and old machines are reaching the end of their service life. Rostselmash and other manufacturers are also switching to shortened work weeks. Meanwhile, the fields are seeing the harvest of a “compact (poor) crop.”

Agriculture

For the second year in a row, southern regions are experiencing a record-low harvest. Russia may lose up to 25% of its grain crop. May frosts and drought devastated the crops, while the high Central Bank rate and rising fuel prices have made farming unprofitable. Russia is now importing butter from the UAE and potatoes from Mongolia.

Construction

After a brief surge in late 2024-early 2025, growth rates fell to 2.6% in March 2025. Almost no new projects are being launched, and the production of building materials and metals is stagnating. Why? Because there’s no demand, while wage arrears at construction companies are increasing.

Gas by coupons

A 4.3% drop in oil output and declining gas output is already a wake-up call for the budget, as these resources have been the main source of money for decades. But drone strikes on oil depots and OPEC+ commitments have taken their toll. And to keep citizens ’entertained,’ a certain Soviet-era practice has returned in some regions.

In Primorye, annexed Crimea, and Zabaykalsky Krai, gas can only be bought using coupons, while in Chita, no more than 10 liters per car are allowed. Kilometer-long lines form at gas stations. Gas prices have risen by 50% since the start of the year. The authorities blame “seasonal demand,” but everyone knows it’s a result of drone strikes and sanctions.

Aviation

Out of 15 commercial jets planned for production in 2025, only one has actually been delivered. The production of the rest is stalled due to sanctions and a lack of components. With a fleet of more than 700 foreign-made planes, Russia is effectively hostage to imports of spare parts through third countries. The number of engineers isn’t growing either. And so far, it’s difficult to replace them with migrant workers.

Shipbuilding

Rosmorport terminated its contract with the Onega Shipbuilding Plant to build two icebreakers worth 18.5 billion rubles ($230 million). The reason is sanctions, which prevented the project from even starting. Cooperation with Türkiye’s Kuzey Star Shipyard was planned, but the war cut everything off.

TVs

Voronezh-based manufacturer Kvant discontinued the production of Irbis TVs due to “insufficient consumer interest,” and employees haven’t received their salaries since the end of 2024. The wage arrears have already exceeded 60 million rubles ($745 thousand).

In the first seven months of 2025, Russia’s budget deficit reached 4.88 trillion rubles ($60.5 billion). Regional budgets accumulated a shortfall of 400 billion rubles ($5 billion) over six months. The high Central Bank rate is suffocating businesses, sanctions are blocking technologies, and drones are adding to this chaos.

The Kremlin spends 40% of the budget on war, while the civilian economy dreams of a bright future.

Source: https://x.com/Gerashchenko_en/status/1959349554987315615