The Washington Post notes that the Russian economy is in its worst shape in four years, driven primarily by a sharp drop in oil revenues and depletion of reserves. There is a high probability that it will collapse as early as 2026.
Points of attention
- This month, Russia's oil and gas revenues will fall by 49% compared to December 2024.
- Economists are sounding the alarm over a "systemic banking crisis."
The economic situation in Russia is rapidly deteriorating
What is important to understand is that economists from different countries of the world have been predicting a banking crisis and recession in Russia for several months now, as early as 2026.
The central bank was forced to raise interest rates to a record high of over 20% to curb galloping inflation after the government spent the first three years of the war with high military spending, fueling a corporate lending boom, and import prices soared due to sanctions.
The Kremlin also cannot ignore the fact that high interest rates are still eating into corporate profits and cash reserves.
What is truly telling is the fact that investments have stopped, and production in some sectors has significantly decreased.
Moreover, it is indicated that the level of debt default has increased sharply throughout the economy.
Sanctions against state-owned companies Rosneft and Lukoil are forcing Moscow to sell oil at huge discounts. The price of Urals crude has fallen to $35 a barrel, well below the $69 initially projected in the 2025 budget.
