russia Going Bankrupt from Within

russia has entered an economic tailspin. Data from March 2026 show a simultaneous decline across all key indicators – from business activity to real household incomes. The picture that is emerging contradicts the kremlin’s official narrative of a “stable” economy.

Three-quarters of small and medium-sized businesses report a lack of profit sufficient for growth. Just a month ago, this figure stood at 57%. Only 8.3% of surveyed entrepreneurs are ready to invest in expanding production, compared to 29% in February. Businesses cite low demand (42%), unaffordable loan costs (33%), and rising expenses (14%) as the main obstacles to growth.

The bank of russia’s business climate indicator – one of the key operational indicators of business activity – fell below zero in March 2026. The decline has continued uninterrupted since the beginning of the year: 1.5 points in January, 0.2 – in February, and another 0.1 – in March. The deterioration has affected nearly all sectors of the economy. russian companies are seriously considering cutting back on production.

The consumer sector is reflecting the crisis in real time. In the first two months of 2026 alone, 125 restaurants closed in moscow; another 460 establishments are expected to close by the end of the year. This trend is not limited to moscow: similar developments are being observed in st. petersburg, novosibirsk, and tatarstan. In parallel, the number of traditional coffee shops in the country has dropped by 13%. In moscow – minus 12%, in st. petersburg – minus 23%. The sector, which has traditionally served as a barometer of the state of the urban middle class, is rapidly shrinking.

rosstat reports a decline in the poverty rate – from 7.1% to 6.7% last year. However, data from the “levada center” paint a fundamentally different picture: the share of russians who consider their income sufficient to cover the subsistence minimum fell from 48% to 41% within just one month. The gap between official statistics and people’s subjective perceptions continues to widen.

Social tensions are spilling over into open protests. Construction workers in murmansk have gone on strike over delayed wages. In the temporarily occupied city of Mariupol, several construction companies involved in the “reconstruction” of the city destroyed by the russians have stopped paying their workers. In komi, workers at a plywood factory held a spontaneous meeting due to months of unpaid wages. The situation is most dire in the kuzbass, where more than 6,000 miners have lost their jobs; most of them have still not received their wages, and some have been waiting for payment for over a year.

russia’s aggression against Ukraine is becoming increasingly costly – and it is ordinary russians who are paying the price.