Approximately one-third of Russia’s largest corporations reported losses during the first half of 2025, marking the highest percentage since the onset of the Covid-19 pandemic. This trend highlights the significant impact of the ongoing conflict and sanctions on the nation’s economy, as reported by the pro-Kremlin publication Izvestia.
Data from Rosstat, the state statistics agency, indicates that around 19,000 firms experienced total losses exceeding 5 trillion rubles ($62 billion) from January to June. In contrast, 43,000 businesses collectively generated profits amounting to 18.4 trillion rubles ($228 billion) in the same timeframe.
It is important to note that these statistics do not cover small and medium enterprises, financial institutions, or government entities.
Izvestia highlighted that this is the first occurrence since the pandemic-related lockdowns in 2020 that the proportion of unprofitable companies has surpassed 30%. Experts interviewed by the newspaper noted that typically, only about 20% of businesses operate at a loss in developed economies.
The Russian Ministry of Economic Development contends that some of these losses can be attributed to seasonal fluctuations, with officials expressing optimism about a profit recovery later in the year.
However, experts consulted by Izvestia identified several key factors behind the decline in profits during the first half of 2025, including Western sanctions, inflation driven by unprecedented military expenditures, increased corporate taxes, and high-interest rates implemented by the Central Bank to control price increases.
Sectors such as coal mining, utilities, transportation, and research have been particularly hard-hit, while companies linked to defense and engineering have reported revenue surges of up to 200%. The IT sector has benefited from tax incentives introduced in 2022 aimed at dissuading businesses from relocating overseas.
Prominent business leaders in Russia have been urging the Central Bank to lower its key interest rate, currently at 18%. They caution that the combination of high rates and an overvalued ruble could create a “perfect storm” detrimental to investment and economic growth in the future.
In July, policymakers noted that inflation expectations remain high, indicating that any future easing of monetary policy would be cautious and gradual. The Central Bank of Russia is expected to make a decision regarding adjustments to its key rate next week.
