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Russians are losing faith in the economy faster than the Kremlin can conceal it. At the same time, inflation expectations in Russia are rising.
This was reported by Ukraine’s Foreign Intelligence Service (FISU), UATV English reports.
“Business activity in Russia has fallen to spring 2022 levels. The business climate indicator calculated by the Russian central bank fell to minus 3.6 points in June, from 0.9 in May. Zero on this scale separates growth from decline, so business no longer believes in improvement,” the agency stated.
According to the report, both current assessments and companies’ expectations have worsened in Russia, with the decline recorded across most industries and all groups of enterprises, from large corporations to small businesses.
“At the same time, inflation expectations are rising. According to Russian central bank monitoring data, companies’ price expectations rose by 4.4 percentage points in July, to 20.2 percentage points. Less fuel, higher logistics costs, more expensive goods,” the FISU post states.
Ukraine’s foreign intelligence noted that ordinary Russians’ moods are rapidly deteriorating, following business sentiment: “A Levada Center survey recorded a complete absence of optimism regarding personal well-being and the state of the economy overall. The consumer sentiment index has been falling for a year and, at the end of June, dropped below the 100-point mark that separates optimism from pessimism.”
The agency reported that over the year, this index has lost 23 points, with 9 of them coming in just the last two months. Meanwhile, the corporate sector in Russia is rapidly sinking into debt.
“In the first half of the year, the number of legal entities declared bankrupt rose by 10.8%, and the number of new bankruptcy cases increased by 20.9%. Another telling trend: companies that have accumulated debt are increasingly publicly announcing their intent to initiate bankruptcy proceedings. The number of such announcements exceeded 2025 figures by 43%, and 2024 levels by 83%,” the report states.
It is noted that amid the economic downturn, the Kremlin continues to talk about a need for workers: “Russia’s Labor Minister Anton Kotyakov stated that Russia’s economy will need approximately three million workers, and operators of production equipment and machinery, over the next six years. The question of where these people are supposed to come from in a country with record-low unemployment, high mobilization of working-age men, and mass emigration of specialists remains unanswered.”
But, according to FISU, there is one sector that traditionally thrives in Russia.
“Russia’s pawnshop market is forecasting a 60% increase in profit in 2026. When the population pawns their property just to make it to payday, and businesses are closing shops instead of opening new ones, that’s the most accurate indicator of the direction the country’s economy is heading,” FISU noted.
As previously reported, FISU stated that the Kremlin has driven small business to mass defaults.
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