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Russia’s economy is entering a phase of “expensive money,” which is becoming the new normal amid the war against Ukraine and prolonged macroeconomic instability, according to the Foreign Intelligence Service of Ukraine, UATV English informs.
Signals from the Bank of Russia indicate that the high cost of capital will persist for a long time, forcing businesses to abandon inertia-based planning, cut investment, and tightly control working capital.
Russian companies will be compelled to reassess project payback periods, payment deferral terms, and the real cost of borrowed funds. As a result, even with formally stable demand, caution is increasing and willingness to pursue growth is declining.
Additional pressure on businesses will come from tax policy. From January 1, 2026, Russia will apply a higher VAT rate of 22%. This complicates settlements with counterparties, increases the risk of tax disputes, and raises administrative burdens—particularly painful for small and medium-sized enterprises in a wartime economy.
The labor market remains tight, with more vacancies than workers. Low unemployment amid mobilization and demographic losses means heightened competition for staff and upward pressure on payrolls. At the same time, an expected slowdown in wage growth is pushing businesses to seek alternatives to the “wage race” through automation, function reductions, and higher demands for universal skills.
Logistics challenges are also mounting. Mandatory electronic document flow and tighter regulation of international transport increase the risk of delays and inspections. For marketplace sellers, the situation is worsened by new platform-economy rules, higher taxes, and regulatory uncertainty—sharply raising the cost of any mistake.
“Taken together, these factors show that the economic consequences of the war against Ukraine are increasingly hitting Russia’s domestic business environment. Instead of development and investment, companies are forced to focus on survival, legal defense, and risk minimization, indicating a systemic degradation of the economy in the medium term,” the intelligence service said.
As previously reported, for the first time since the start of the full-scale war against Ukraine, the Kremlin has officially acknowledged that Russia’s economy has lost momentum and entered a stagnation phase.
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