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After Trillions of Dollars Spent on War, Russia’s Defense Industry Hits a Wall
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Russia’s defense-industrial complex—the engine that has kept the country’s economy running through war and sanctions—is suddenly stalling, according to the Russian outlet The Moscow Times on October 24.
After nearly three years of double-digit growth, industries tied to the defense sector have entered a phase of stagnation and even contraction, according to new data from Rosstat .
The category of “finished metal products,” which had surged by 26.4% in 2023 and an even higher 31.6% in 2024, unexpectedly fell 1.6% year-over-year in September after posting a 21.2% increase in August.
Output of “other transport equipment”—a Rosstat classification that includes tanks and infantry fighting vehicles—slowed its growth more than tenfold, from 61.2% in August to just 6% in September. In the previous two years, the same category had risen 29% and 34.2%, respectively.
Compared with August, production of finished metal products dropped by 6%, while output of “other transport equipment” collapsed by 20%, according to Raiffeisenbank’s estimates.
The latest military-industrial figures “look shocking,” analysts at MMI wrote, noting that the defense-related sectors that had been pulling the economy upward are now dragging it down. The broader manufacturing index rose just 0.4% year-on-year in September—eight times slower than August’s 2.4% increase.
Manufacturing is Russia’s largest economic sector, and its September growth was the weakest since early 2023, said Denis Popov, chief analyst at PSB.
Overall industrial output—which accounts for about 30% of the country’s GDP—has nearly flatlined, rising only 0.3% year-over-year in September compared to 5.6% a year earlier.
According to analysts at TsMAKP, total industrial production has fallen 3.6% since December. Civilian industries have been shrinking throughout 2025, and by September, their output was down 1.1%.
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In the manufacturing sector, 18 out of 24 categories tracked by Rosstat—together responsible for nearly 80% of Russia’s industrial goods—are now in recession, The Moscow Times notes.
The machinery sector, which depends heavily on government defense contracts, fell 0.1% in September after expanding 15.7% year-on-year in August, thanks to military production.
To stay within the federal budget plan—which is struggling with a 21% drop in energy revenues and a deficit five times larger than initially projected—the Finance Ministry will have to cut spending in the fourth quarter, Popov of PSB said.
That, he added, “poses significant risks of an economic cooldown.” According to the Russian Academy of Sciences’ estimates, the country’s GDP shrank 0.6% from January to August, and annual growth has nearly vanished—just 0.4% in both July and August.
Earlier, reports emerged that Russia’s defense industry aims to manufacture, upgrade, or overhaul 1,118 T-90M and T-90M2 main battle tanks between 2027 and 2029.
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