‼️It seems the Russian economy is headed towards a collapse in 2025. And Putin knows this.

While the Kremlin likes to pretend that their bloody war economy is doing better than ever, this is far from the truth.

In attempts to stop runaway inflation due to increased defense spending, the Russian Central Bank has increased the interest rate to record high 21% and will “very likely” raise it again in December. It is unclear whether they will be able to stop inflation this way, but this move is likely to bear devastating consequences for Russian businesses, already hurt by Western sanctions.

Many are already reporting a drastic increase in late payments from counterparties – a worrying sign for the economy. Financial experts are expecting a “wave” of bankrupcies to sweep the Russian market over the next several months, and many leading businesses have grim prognoses for 2025.

Russia’s biggest steel manufacturer, Magnitogorsk Iron and Steel Works, have enough reserves only for another 6 months and have a “very negative” outlook for 2025.

Samolet group, a major real estate developer is also on the brink of collapse – their sales are down 37%, and one of the biggest shareholders is trying to sell his stake in the company. As a systemic company for the Russian economy, the default of Samolet would likely require a government bailout.

Russia’s Union of Shopping Centers has appealed to the government for support. They are requesting subsidized interest rates of 7-10 percent, debt restructuring, and payment deferrals of 5-10 years. Without these measures, 200 shopping centers risk bankruptcy.

Among other companies that foresee a default in their future are Krial Energo Stroy plant and strategic enterprise “Rosgeologia”, while national restaurant chain “Kuzina” has technically defaulted already.

Even the defense industry is not safe from the effects of the interest rate hike. Sergey Chemezov, the head of the state-owned defense conglomerate Rostec warned, “If we keep operating like this, most of our businesses will go bankrupt. Even arms sales don’t generate enough profit [to service debt at rates above 20 percent].”

If these predictions come to be over the next two quarters, Russia’s economy is in for a major “shakeup” – economic growth will slow and inflation rates will keep growing. Very clear sign that the economy is doing well, right?

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