Russian economy suffers under Western sanctions

Russia's economy is reeling as construction firms topple under crippling debts. Sanctions have hit hard, causing revenue shortfalls in crucial sectors like oil and gas. Vital oil and gas revenues plummeted by a fifth last year, leaving industries like construction facing the abyss.

Russian construction companies are collapsing, with debts escalating alarmingly. The Russian paper Izvestia flagged three major firms nearing bankruptcy, totalling almost £900,000 in debts. SC Donstroy, based in Rostov-on-Don, succumbed to bankruptcy with debts of 11 million rubles (£105,000).

LLC "STEK" followed suit, declared bankrupt last year owing 39 million rubles (£373,000). Stroyproekt Group teeters on the brink, while Regionstroy has already succumbed with debts around 43 million rubles (£402,000).

Ukraine’s foreign intelligence warns of deeper economic woes, describing Russia as trapped between recession and surging prices. According to them, Russia’s Central Bank's strict policies have strangled business growth, plunging the economy into stagnation.

Adding salt to the wound, the budgetary constraints loom large. Tax changes have decreased incentives, and maintaining high spending in 2025 despite tumbling revenues is worsening the deficit. The financial pressure mounts relentlessly, and industries are buckling.

The construction sector isn't the only victim. Housing developers and the coal industry are also suffering as interest rates soar. The spectre of bankruptcy is spreading, further showcasing the economic turmoil engendered by Western sanctions.

As the outlook dims, analysts and economists watch closely, assessing how Russia will navigate this financial storm. The situation seems dire, with no immediate relief in sight. The collapse of these industry giants serves as a stark reminder of the far-reaching impact of global economic policies.

Key Takeaways

• Russian construction firms face massive bankruptcy risks.

• Western sanctions have severely impacted oil, gas revenues.

• Economic policies have contributed to deepening stagnation.

  

Adapted by ASEAN Now from Source 2026-02.02

 

 

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Might I suggest that it is worth treating this story with some caution.

The examples cited involve small to mid-sized construction firms, with debts measured in millions of rubles, not billions. These aren't “industry giants” that demonstrate systemic economic collapse.

Much of the analysis also relies on Ukrainian intelligence assessments and selective media reports, which are not neutral economic data.

The fact is that no comprehensive figures are provided on Russia’s overall construction output, employment levels, or state-backed refinancing all of which must be considered when assessing sector-wide distress.

Sanctions have undoubtedly increased costs and interest rates in Russia, particularly after the central bank tightened policy. However, claims of an economy “reeling” or “on the brink” require far more evidence than isolated bankruptcies and secondary and bias sources.

It's probably fair to say that pressures exist, but the article appears to use limited data to make dramatic conclusions that are not clearly supported by verifiable, economy-wide indicators.

1 hour ago, Jim Waldron said:

Might I suggest that it is worth treating this story with some caution.

The examples cited involve small to mid-sized construction firms, with debts measured in millions of rubles, not billions. These aren't “industry giants” that demonstrate systemic economic collapse.

Much of the analysis also relies on Ukrainian intelligence assessments and selective media reports, which are not neutral economic data.

The fact is that no comprehensive figures are provided on Russia’s overall construction output, employment levels, or state-backed refinancing all of which must be considered when assessing sector-wide distress.

Sanctions have undoubtedly increased costs and interest rates in Russia, particularly after the central bank tightened policy. However, claims of an economy “reeling” or “on the brink” require far more evidence than isolated bankruptcies and secondary and bias sources.

It's probably fair to say that pressures exist, but the article appears to use limited data to make dramatic conclusions that are not clearly supported by verifiable, economy-wide indicators.

If you consider the economic fundamentals that construction companies in Russia are facing, the report may not be that far from the mark. Many government stimulus programs have been ended as the government tightened expenditures to increase defence spending. For example, a major program for mortgage subsidies ended in 2024 and resulted in collapse in demand for the properties. Rising cost on borrowings have severly increase debt servicing and costs. The central bank benchmark is at 21%. The sanction impacts have also affect the economy. It is widely reported that 1 in 4 construction companies faced bankruptcy.

Hilarious.

No….ridiculous.

Making a statement about the health of a country’s economy using 3 tiny construction companies (with a combined total of £900,000 in debt), is like trying to say that the US economy is collapsing because ONE homeowner in Palo Alto went into foreclosure and subsequently filed for bankruptcy.

22 hours ago, Airalee said:

Hilarious.

No….ridiculous.

Making a statement about the health of a country’s economy using 3 tiny construction companies (with a combined total of £900,000 in debt), is like trying to say that the US economy is collapsing because ONE homeowner in Palo Alto went into foreclosure and subsequently filed for bankruptcy.

The source is Ukrainian intelligence, over-dramatised by AN's so-called journalists. Treat with the contempt it deserves.

22 hours ago, Airalee said:

Hilarious.

No….ridiculous.

Making a statement about the health of a country’s economy using 3 tiny construction companies (with a combined total of £900,000 in debt), is like trying to say that the US economy is collapsing because ONE homeowner in Palo Alto went into foreclosure and subsequently filed for bankruptcy.

It is like they that those numbers are incorrect as they do represent incredibly insignificant sums of money, it's likely into the hundreds of billions.

And I certainly hope this is correct, as that would likely be the only thing that could tame King Vlad, at this moment in time.

On 2/3/2026 at 6:21 AM, ASEAN NOW News said:

SC Donstroy, based in Rostov-on-Don, succumbed to bankruptcy with debts of 11 million rubles (£105,000).

105,000 pounds?

Well, that's it then. Russia is clearly doomed. 😄

23 minutes ago, JonnyF said:

105,000 pounds?

Thats about the cost of a D5 Cat. At least one that wasnt Lend Lease from 1945

21 minutes ago, JonnyF said:

105,000 pounds?

Well, that's it then. Russia is clearly doomed. 😄

You clearly don't seem to grasp significance of S.C.Donstroy who is a leading developer in Moscow going bankrupt for a measly sum. The company project portfolio includes 9.8 million square meters of real estate. The construction market is facing a severe rising costs and low demand. Even a small amount of default will push companies into bankruptcy.

47 minutes ago, Eric Loh said:

You clearly don't seem to grasp significance of S.C.Donstroy who is a leading developer in Moscow going bankrupt for a measly sum. The company project portfolio includes 9.8 million square meters of real estate. The construction market is facing a severe rising costs and low demand. Even a small amount of default will push companies into bankruptcy.

You clearly don’t seem to grasp the fact that S.C. Donstroy is a completely different company, in a completely different city, than the company Donstroy that you are referring to.

Not to mention….one of the “construction firms” held up as an example isn’t actually a construction firm but just a piddly property management company.

You might be able to google, but your reading comprehension skills are lacking.

On 2/3/2026 at 9:07 AM, Jim Waldron said:

Might I suggest that it is worth treating this story with some caution.

The examples cited involve small to mid-sized construction firms, with debts measured in millions of rubles, not billions. These aren't “industry giants” that demonstrate systemic economic collapse.

Much of the analysis also relies on Ukrainian intelligence assessments and selective media reports, which are not neutral economic data.

The fact is that no comprehensive figures are provided on Russia’s overall construction output, employment levels, or state-backed refinancing all of which must be considered when assessing sector-wide distress.

Sanctions have undoubtedly increased costs and interest rates in Russia, particularly after the central bank tightened policy. However, claims of an economy “reeling” or “on the brink” require far more evidence than isolated bankruptcies and secondary and bias sources.

It's probably fair to say that pressures exist, but the article appears to use limited data to make dramatic conclusions that are not clearly supported by verifiable, economy-wide indicators.

Whilst these are isolated bankruptcies, they appear to be a warning for a sector that has been the backbone of Russia's GDP for a decade.

Whilst those individual debts (around £900,000) are a drop in the ocean, the broader context is staggering, As of early 2026, it is estimated that nearly 20-30% of all Russian property developers are currently facing a serious risk of bankruptcy. The issue is no longer about bad management; it's about a complete loss of liquidity across the industry.

There is a three-way squeeze afecting the Russian construction sector:

1. The end of 'cheap money': Last year, the Russian government ended its massive subsidised mortgage programme (which kept rates at 8%). Market mortgage rates have since spiked above 25%, effectivey killing demand for new mass-market housing.

2. Sky-high interest rates: The Central Bank of Russia has kept the key rate at 16-17% (or higher) to combat inflation. Smaller firms that rely on bridging loans to finish projects simply cannot service their debt at these levels.

3. Input cost explosion: Materials like concrete and steel have seen price increases of 30-60% in the last year, while labour shortages (driven by the war and emigration) have pushed wages to record highs.

On the bigger Russian economy picture:

- Russia is selling physical gold to plug budget holes (short-term liquidity but erosion of long-term stability of the Ruble).
- The Russian National Wealth Fund gold and yuan reserves have plummeted by over 50% since the invasion began.
- Russian budgeted on oil sales at $60 but Urals crude has been trading recently at $40-45 due to deepened sanctions and a global surplus (and the foreseeable trend is a continuing drop in the price of oil this year due to sanctions and surplus)
- Russia budgeted for the Ruble to be around 92 against the US dollar. It's currently around 77 so they don't get so many Rubles when they sell gold in dollars.
- Finally, with interest rates above 20% and a massive labour shortage, non-war industries are in a traumatic recession.

Let's hope Ukraine can hold out long enough to see enough damage to the Russian economy to take Putin and his cronies down.

Slava Ukraini.

A bad situation and it will get a lot worse economically for Russia in 2026

Hogwash from the sources that have been producing it since this proxy war began.

11 minutes ago, TooPoopedToPop said:

Hogwash from the sources that have been producing it since this proxy war began.

Proxy war between who exactly? Russia and everybody else? Who is Russia a proxy for?

Why do most of the pro Russia posters have very few posts?

2 hours ago, IsaanT said:

Whilst these are isolated bankruptcies, they appear to be a warning for a sector that has been the backbone of Russia's GDP for a decade.

Whilst those individual debts (around £900,000) are a drop in the ocean, the broader context is staggering, As of early 2026, it is estimated that nearly 20-30% of all Russian property developers are currently facing a serious risk of bankruptcy. The issue is no longer about bad management; it's about a complete loss of liquidity across the industry.

There is a three-way squeeze afecting the Russian construction sector:

1. The end of 'cheap money': Last year, the Russian government ended its massive subsidised mortgage programme (which kept rates at 8%). Market mortgage rates have since spiked above 25%, effectivey killing demand for new mass-market housing.

2. Sky-high interest rates: The Central Bank of Russia has kept the key rate at 16-17% (or higher) to combat inflation. Smaller firms that rely on bridging loans to finish projects simply cannot service their debt at these levels.

3. Input cost explosion: Materials like concrete and steel have seen price increases of 30-60% in the last year, while labour shortages (driven by the war and emigration) have pushed wages to record highs.

On the bigger Russian economy picture:

- Russia is selling physical gold to plug budget holes (short-term liquidity but erosion of long-term stability of the Ruble).
- The Russian National Wealth Fund gold and yuan reserves have plummeted by over 50% since the invasion began.
- Russian budgeted on oil sales at $60 but Urals crude has been trading recently at $40-45 due to deepened sanctions and a global surplus (and the foreseeable trend is a continuing drop in the price of oil this year due to sanctions and surplus)
- Russia budgeted for the Ruble to be around 92 against the US dollar. It's currently around 77 so they don't get so many Rubles when they sell gold in dollars.
- Finally, with interest rates above 20% and a massive labour shortage, non-war industries are in a traumatic recession.

Let's hope Ukraine can hold out long enough to see enough damage to the Russian economy to take Putin and his cronies down.

Slava Ukraini.

Russia extended their subsidized mortgage program until 2030 for families with young children. 6% rates for *new* condos and homes

It appears that there are also other programs to purchase houses in the arctic and far eastern regions. 2% rates

There are also builders who offer financing at 6%.

Of course, new builds will have higher prices..

Other than that….20% and up.

I’d prefer the 20% rate myself.

https://www.spb-estate.com/en/news_realty/family-loan-with-6-rate-was-extended-till-2030/#:~:text=Family%20mortgage%20at%206%25%20rate,conditions%20for%20the%20whole%20family.

12 minutes ago, Airalee said:

Russia extended their subsidized mortgage program until 2030 for families with young children. 6% rates for *new* condos and homes

It appears that there are also other programs to purchase houses in the arctic and far eastern regions. 2% rates

There are also builders who offer financing at 6%.

Of course, new builds will have higher prices..

Other than that….20% and up.

I’d prefer the 20% rate myself.

https://www.spb-estate.com/en/news_realty/family-loan-with-6-rate-was-extended-till-2030/#:~:text=Family%20mortgage%20at%206%25%20rate,conditions%20for%20the%20whole%20family.

Most may not like you who can afford the 21% central bank rate. The targeted mortgage programs will not provide relief to the slowdown in sales as it is not a broad market support program which ended in 2024.

1 minute ago, Eric Loh said:

Most may not like you who can afford the 21% central bank rate. The targeted mortgage programs will not provide relief to the slowdown in sales as it is not a broad market support program which ended in 2024.

Smart money buys cheap assets with expensive money.

Dumb money buys overpriced assets with cheap money.

Who cares about the slowdown in sales in Russia and the bankruptcy of a few nobody builders? I sure don’t.

14 minutes ago, Airalee said:

Smart money buys cheap assets with expensive money.

Dumb money buys overpriced assets with cheap money.

Who cares about the slowdown in sales in Russia and the bankruptcy of a few nobody builders? I sure don’t.

You better pray for a short recovery time for your investments which may be months, years or never even occur. Russia is a poor bet for a short recovery time.

29 minutes ago, Eric Loh said:

You better pray for a short recovery time for your investments which may be months, years or never even occur. Russia is a poor bet for a short recovery time.

What does that have to do with the fact that you erroneously used the wrong company to try to make a point (and never corrected yourself)?

This facts in this article don’t portend the Russian economy collapsing and the players going bankrupt were not “Construction Giants” but instead, were nobodies.

Russia extended their subsidized mortgage program until 2030 for families with young children. 6% rates for new condos and homes

This is broadly correct but there are catches. The family must have one child aged 6 or under (or a child with a disability). If the family has older children or only one child, the government is currently debating raising that rate to 12% this year to encourage people to have more babies.

It appears that there are also other programs to purchase houses in the arctic and far eastern regions. 2% rates

Again, broadly true, but the motive is to stop people fleeing the Arctic regions because no-one wants to live there.

There are also builders who offer financing at 6%.

On the face of it, true. However, it's a price trap. The builder offers 6% interest when the market rate is 25%. To afford this, the builder simply inflates the price of the flat by 20-230%.

Other than that….20% and up.
The current market rates for anyone not in a "special" category are between 25-28%.

I’d prefer the 20% rate myself.
Perhaps, but the average Russian citizen can't afford them.

3 hours ago, TooPoopedToPop said:

Hogwash from the sources that have been producing it since this proxy war began.

For sure.

It's obviously a proxy war... the West against Russia.

The motley support team is replete with Zionist cheerleaders.

Ineptitude and lack of coordination have taken it from tragedy into a farce like something run by the Keystone Kops.

4 hours ago, JingerBen said:

The motley support team is replete with Zionist cheerleaders.

Tell us what you mean by that?

Russia is now a paper Tiger bully boy ,, soon China will grab most of Siberia and Western half will crumble ,, The povery levels outsidde Moscow and a few big cities is pitiful ,,the population is broken ,,

19 hours ago, liddelljohn said:

Russia is now a paper Tiger bully boy ,, soon China will grab most of Siberia and Western half will crumble ,, The povery levels outsidde Moscow and a few big cities is pitiful ,,the population is broken ,,

You and all the Russian people haters like you think it would be nice to see China taking over Siberia.

You guys fail to see that a China disposing of the Siberian mineral, energy, etc. resources would be a world dominating power.

Not quite what the US Hegemon wishes for.

Already the US-Russia Ukraine proxy war has had the unplanned collateral inconvenient result (for the US) of bringing Russia and China in closer cooperation.

10 minutes ago, jayceenik said:

all the Russian people haters like you

Nonsense. Not liking their government doesn't equate hating the people. Same for the US, same for Israel, both countries where the same nonsense claims are made off

Warmakers will fight to the last expendable soldier rather than looking 'weak'. These aggressive bullies will kill a generation of young men, bankrupt the nation and force its people into abject poverty, all while fillings its courts and prisons with dissidents.

That's how warmongers work. A little money problem will not bring Vlad to his knees. His money is overseas.

2 hours ago, jayceenik said:

You and all the Russian people haters like you think it would be nice to see China taking over Siberia.

You guys fail to see that a China disposing of the Siberian mineral, energy, etc. resources would be a world dominating power.

Not quite what the US Hegemon wishes for.

Already the US-Russia Ukraine proxy war has had the unplanned collateral inconvenient result (for the US) of bringing Russia and China in closer cooperation.

The poster was just highliting the consequences of this war.

That was really stupid from Putin to invade Ukraine, thus annihilating the good and profitable relations with European countries and making Russia a China's hostage! 🤣

On 2/8/2026 at 9:19 AM, jayceenik said:

You and all the Russian people haters like you think it would be nice to see China taking over Siberia.

You guys fail to see that a China disposing of the Siberian mineral, energy, etc. resources would be a world dominating power.

Not quite what the US Hegemon wishes for.

Already the US-Russia Ukraine proxy war has had the unplanned collateral inconvenient result (for the US) of bringing Russia and China in closer cooperation.

Actually i love real russian culture, history and people having been there and worked there but i hate the evil Putin Kleptocratic thug Government but Russia is very vulnerable to chinese expansion in the far east ,,,,,

Welli will not be buying any Russian rubles for any reasons for the near future at least.

I will not be visiting Russia as well any time soonor buying any Russian booze or products.