Russian Industry Faces Steepest Decline in Decades,Recession looms
Russia‘s industrial sector is experiencing it’s most notable downturn since the late 1990s,marked by weak output growth adn demand falling below typical levels. While defense industries show growth, civilian production is consistently shrinking, raising concerns of an impending recession.
According to a closely tracked index spanning three decades, industrial sentiment plummeted in November, reaching levels only surpassed by the 2008 financial crisis and the peak of the COVID-19 pandemic. despite a slight rebound in October following a sharp drop in September, overall industrial production grew by only 1% in the first ten months of 2025. A majority of companies report demand remains “below normal,” echoing conditions seen during Russia’s economic difficulties in the early 2000s.
Analysis reveals a stark divide within the sector. Growth is almost exclusively concentrated in defense-related industries,with approximately two-thirds of major industrial categories experiencing declining production. companies are increasingly burdened by debt repayments stemming from financial pressures during the pandemic and the initial phase of the conflict in Ukraine, impacting profitability. High borrowing costs, weak demand, and a strong ruble are identified as key challenges.
Specific sectors, such as wood processing, are predicted to face further contraction. Experts also warn that large-scale government projects currently supporting the sector are nearing completion without clear successors. Industry leaders in metals and construction express growing concerns regarding diminishing export opportunities and a decline in national competitiveness.
The Center for Strategic Research now forecasts a recession as unavoidable,anticipating a more rapid and severe slowdown than previously projected. Contributing factors include high interest rates, rising taxes, and stagnant growth.Economists suggest the Russian government faces critical decisions, balancing political considerations with the necessity of economic reforms. They emphasize the urgent need for strategic changes to avert further economic deterioration.
