The Russian economy is entering a new, critical phase of crisis. Analysts are recording a simultaneous drop in stock market indices, a collapse in the value of state bank shares, and growing pessimism in business circles. According to a report by the Institute for the Study of War (ISW), current difficulties are a direct consequence of the war against Ukraine and the Kremlin's economic policy, which has redirected resources to military needs for years.

Crash on the Moscow Exchange

One of the most striking alarm signals was the situation in the financial market. On July 16, the main index of the Moscow Exchange plummeted by more than 4%. This was the worst result in the last four years. The negative trend continued the next day.

At the same time, shares of the largest state bank, VTB, reached an all-time low, losing another 6% of their value in a single day. Experts note that the problems of the Russian economy have gone far beyond the fuel crisis that arose after strikes on Russian oil refineries.

Pressure Factors and Business Climate

The Russian economy is being pulled down simultaneously by several powerful factors. Among them:

  • Record military spending;
  • High inflation;
  • Acute labor shortage in civilian sectors;
  • Reduction of state reserves;
  • Strengthening of state control over business.

Additionally, the situation is exacerbated by the Kremlin's campaign to restrict access to the internet, creating new difficulties for companies and curbing economic activity.

A worrying signal also came from the Central Bank of Russia: the business climate index fell to its lowest level since April 2022. This indicates that Russian business itself is assessing the situation with increasing pessimism.

Budget Crisis and Social Reaction

Russia is facing a sharp rise in the budget deficit. According to Reuters, federal spending could exceed the planned level by more than 1 trillion rubles. The budget deficit has already reached 5.73 trillion rubles, and the Ministry of Finance admits that it will remain above the plan for at least the next few years.

Economic difficulties inevitably reflect on public sentiment. The Public Opinion Foundation, linked to the Kremlin, reported a five percentage point drop in Vladimir Putin's approval rating — to 66%. A similar trend was recorded by the state-run VTsIOM.

Although ISW experts note that Russian state polls are not always objective, even these data indicate that ordinary citizens are feeling the economic consequences of the war more strongly. Experts believe that Russia is entering a phase of crisis, the consequences of which will become increasingly difficult for the authorities to manage.