Russia’s economy is losing momentum: production is declining, and regions are becoming dependent on subsidies
Kyiv • UNN
Russia’s Ministry of Economic Development forecasts a 0.2% decline in industrial production in 2026. Sixty-five regions depend on assistance from the federal center, while the metallurgical industry has lost 5.2%.
The Russian economy is showing increasingly pronounced signs of crisis: for the first time in five years, Russia’s Ministry of Economic Development is forecasting a decline in industrial production at the end of the year. The shift to a wartime economy did not meet the Kremlin’s expectations — production, regional revenues and domestic demand are declining. This was reported by the Foreign Intelligence Service, UNN writes.
Russia’s Ministry of Economic Development officially recorded an industrial downturn for the first time in the past five years. At the end of 2026, a decline of 0.2% is expected instead of the projected growth of 0.6%. Over the first eight months of the current year, the indicator remained at zero, while in August it fell by 0.8% year-on-year. This negative trend was a direct consequence of the Kremlin’s shift of the Russian economy to a "wartime footing
It is noted that the key factor was the contraction of domestic demand caused by high inflation, currency fluctuations and expensive borrowing. At the same time, amid the economic crisis, production at defense-industry enterprises is also being curtailed due to cuts in the state defense order — enterprises that, according to Moscow’s promises and calculations, were supposed to support the overall situation in the country.
The industries most affected were those directly dependent on consumer activity and lending: the automotive industry, construction, agriculture and the chemical industry. The decline in revenues is turning regions into subsidized ones, further undermining the population’s purchasing power. As of today, 65 constituent entities of the Russian Federation are unable to sustain themselves without assistance from the center and are subsidized, while only 24 remain donor regions.
Overall, Russia’s metallurgical industry has lost 5.2% of its total output, chemical enterprises 3%, garment production 4.2%, elevator production has fallen by 20%, and freight railway car production by 30%. Petroleum product production has been declining for the third consecutive month, while oil production could fall by the end of the year to its lowest level in the past 17 years.