The pro-Kremlin Center for Macroeconomic Analysis and Short-Term Forecasting (CMAKP) reports stagnation in Russian industry at the beginning of 2026, despite traditionally optimistic official statistics.
According to Rosstat, industrial production grew by 1.7% cumulatively from December to February. CMAKP’s estimates, however, tell a different story: after a brief increase in December, production fell by 0.6% in January and partially recovered in February. Overall, for the three months, there was a decline of 0.3%. “Civilian sectors of Russian industry accelerated their decline at the beginning of 2026,” notes the Kremlin-linked analytical center.
The sectoral picture is even gloomier. In February, production of construction materials fell by 1.4%, ferrous metallurgy by 1.1%, and machinery manufacturing by 2.2%. The combined contribution of most sectors to overall dynamics remains negative: minus 0.8%, including oil refining and metallurgy.
The March PMI index from S&P Global dropped to 48.3 from 49.5 in February — the lowest in three months (the 50 mark separates growth from contraction). Production has been contracting for the 13th consecutive month, and export demand has been falling for the fifth month. Purchasing activity collapsed at the fastest pace in four years: companies are cutting raw material purchases due to declining orders and rising fuel costs. Employment in the sector has been declining for the fourth month in a row.
Russian metallurgy, long considered a flagship of the national economy and a stable source of foreign currency inflows, entered a systemic crisis in 2025–2026. Profitability across the sector dropped to 9.6%, below the cost of servicing loans. JSC “Ural Steel” — the city-forming enterprise in Novotroitsk, a leader in bridge steel production and a key contractor for state defense orders — went from a profit of 11 billion rubles to a net loss of over 22 billion rubles within a year. The tax authorities were forced to postpone debt collection from court rulings manually until the end of April to avoid shutting down the enterprise and laying off 9,000 employees. At the same time, the metallurgical giant “Severstal” recorded a fivefold drop in profit and a 42% reduction in EBITDA.
Small and medium-sized businesses are under a double blow — falling demand and rising tax burdens. Nearly half of businesses in 2025 recorded a collapse in profits. The number of business entities in trade alone fell by 11.5 thousand. In 2026, an estimated 250–300 thousand enterprises may disappear.
Meanwhile, wage arrears in Russia increased 1.7 times over the year, reaching about 2 billion rubles. Experts estimate that 99% of delayed payments occur because companies lack funds. By the end of 2025, hundreds of thousands of workers were already in forced downtime.
The only support for production remains state funding, but even it does not ensure sustainable growth. By the end of 2025, Russia’s state debt had increased by 21%, or 6.1 trillion rubles, reaching 35.1 trillion rubles. Domestic debt rose by 29.1% to 30.7 trillion rubles. Weakening investment activity and domestic demand is accelerating the shift from stagnation to a full-scale decline.
