Big business in Russia reports most severe industrial crisis since the 1990s

Tougher sanctions, higher interest rates on loans and a sharp economic slowdown have pushed Russian industry to the brink of its deepest crisis.

Source: The Moscow Times, citing a survey conducted by the Institute of Economic Forecasting (IEF) of the Russian Academy of Sciences

Details: According to top managers of Russia's largest industrial companies, the situation with sales of their products this year has become the worst since 1998, when Russia declared a default.

It is noted that demand assessments by representatives of big business have fallen below the lows of 2009 and 2015 – the former marked by the global financial crisis, and the latter by the first sanctions imposed on Russia over the annexation of Ukraine's Crimea.

The study says that production plans at factories and plants across Russia have been cut to their lowest level in the past 16 years. The overall industrial optimism index has also dropped to its lowest point since 2009.

After two years in which the budget funnelled tens of trillions of roubles into mega-projects and defence companies, Russia's GDP growth has slowed almost to zero, while industry has slipped into recession.

Background:

• In November, according to Rosstat, industrial output in Russia fell by 0.7% year on year: metallurgy declined by 4.1%, the chemical industry by 1.7%, and machine building by 5.4%. For the first time in 15 years, food production also began to shrink, falling by 0.8%.
• Some sectors experienced a full-scale collapse: tractor production fell by 61.6%, bulldozers by 53.7%, lifts by 37.2%, and passenger railcar output halved. The automotive industry slid back to its worst levels of 2022, with production plunging by 34.1%.

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