Russia's Economy in Stagnation, Budget Injections Fail to Help

Russia's economy has entered a state of systemic stagnation in 2026, despite massive budget injections. Sanctions, high military expenditures, and the central bank's key interest rate are destroying economic stability and leading to the decline of civilian sectors. According to scholars, 2025 marked the beginning of a crisis that exacerbates territorial disproportion. Production decline has affected 41 regions, which is worse than in the first year of the war with Ukraine. The manufacturing industry in the European North has fallen by 20-26% due to the loss of Western markets. Half of the regions recorded a decrease in investments, with investments in Kuzbass nearly halving. The cancellation of preferential mortgages has negatively impacted construction in 34 regions. Official unemployment statistics conceal a crisis in the labor market: downtime at factories has increased by a third, and underemployment has nearly doubled. More than 3.7 million workers have been sent on unpaid leave. The formal growth of household income is supported by high deposit interest rates, while 30% of all savings are concentrated in Moscow. Key metallurgical and chemical centers no longer contribute to budgets due to sanctions and falling global raw material prices.

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