Russian Business Pessimism Hits Record High as 83 Percent Expect Economic Slump

Russian entrepreneurs are increasingly pessimistic about the future of the economy as 83.3% of companies expect conditions to worsen over the next year, The Moscow Times reported on March 20.

A recent survey by the Center for Strategic Research (CSR) revealed a sharp rise in negative sentiment, with three-quarters of respondents also predicting a decline in their own company’s performance. The crisis is being driven by a surge in non-payments, which affected 91.7% of businesses in February, and the crushing weight of high interest rates.

With the Russia’s Central Bank’s key rate sitting at 15%, nearly 42% of firms have entirely cancelled their investment plans, while an equal number have postponed projects indefinitely. Business leaders noted that investment becomes “economically meaningless” when rates exceed 12%, a threshold the Kremlin has far surpassed in its effort to curb war-driven inflation, according to The Moscow Times.

The internal data suggests that Russian leader Vladimir Putin’s wartime economic model is creating a deep rift between the booming defense sector and the collapsing civilian economy. While military production remains propped up by state spending, 20 out of 24 manufacturing sub-sectors are currently in decline. Business activity fell into the “contraction zone” in March, as record-high credit costs and plummeting domestic demand left 75% of surveyed companies with zero profit.

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War in Ukraine

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Experts warned that the price of stabilizing the ruble has become the “frozen” development of the private sector, leading many industries—particularly coal, timber, and automotive—into a cycle of bankruptcy, The Moscow Times wrote.

The rapid degradation of the Russian private sector has reached a breaking point as the Kremlin prioritizes military output over domestic stability. Earlier survey of small business owners revealed that nearly one-third of entrepreneurs are now considering closing or selling their companies due to deteriorating conditions.

Currently, as the “Fortress Russia” model crumbles under the weight of $2.5 trillion in war costs and systemic labor shortages, the civilian economy is entering a deep recession characterized by crashing consumer confidence and a total halt in non-defense modernization.

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