russia’s Civilian Industry Is Speeding up the Decline

The results for 2025 show the rf industry’s shifting to stagnation after a brief period of growth driven by a sharp increase in defense spending in 2023–2024. In January–November 2025, industrial production grew by only 0.8 % year-on-year, reflecting an almost complete loss of momentum amid tightening sanctions, high interest rates, and falling private investment.

Formally positive dynamics was supported by a narrow range of industries directly related to state defense orders. This concentration of growth masks a systemic decline in civilian segments of the economy and deepens structural imbalances.

Budget injections remain the key source of support for industry. In 2025, federal budget expenditures on national defense exceed $172 billion, while only about $56.1 billion is allocated to the national economy, of which 50-70 % actually serve the needs of the defense-industrial complex. This increases the industrial dynamics’ dependence on state resources and narrows the opportunities for market development.

The lion share of the processing industry, which is not integrated into the SDO, is in decline. Reduction of production has been recorded in metallurgy, chemical industry, machine building, and food industry. The collapse in manufacturing of civilian engineering products – from tractors and bulldozers to passenger cars, lifts, and automobiles – is especially sharp, indicating a deterioration in domestic investment demand.

The actual picture for 2025 shows not growth but structural stagnation in russian industry. The model based on defense spending is unsustainable, while maintaining high interest rates and sanctions pressure blocks private investment and technological renewal. Under these conditions, even official growth forecasts for 2026 look more like declarations than reflections of the real state of the economy.