The limit of survival is approaching: Nine reasons that can bury Russia

The Russian economy has entered a phase of “managed degradation.” The facade of stability is cracking at the seams…

One should not trust the official statistics of the Russian Federation, and we don’t advise others to do so either.

According to official Kremlin reports, the Russian economy is showing incredible resilience. However, an analysis of indirect (!) indicators, open sources, and public opinion paints a completely different picture — one of a deep structural crisis, masked by manipulative statistics and propaganda.

 

 

 

Growth on paper, recession in reality. Officially, GDP growth is forecasted at 1.5 percent for 2025. However, according to data from the Peterson Institute for International Economics, the first quarter of 2025 already recorded an economic decline of 0.6 percent compared to the previous quarter—technically a sign of recession.

A "two-speed economy" is emerging: the defense-industrial complex (DIC) is growing thanks to budgetary injections, while civilian sectors are stagnating, deprived of resources and personnel.

 

 

The gap between Rosstat and the reality in the refrigerator. Official inflation is reported at 9 to 10 percent. Independent financial analysts estimate the real price increase at 13 to 14 percent, with some reviews indicating figures around 20 percent.

On social media, people complain about skyrocketing prices: beef costs 700 to 800 rubles, pork 500 to 600, and vegetables and fruit have increased in price by 15 to 20 percent.

 

 

War money is running out. By May 2025, the federal budget deficit reached 3.4 trillion rubles, almost 90 percent of the revised annual plan. The reason: oil and gas revenues dropped by 14 percent, while spending rose by 21 percent.

The Kremlin is depleting the National Wealth Fund (whose liquid portion is already less than 3 percent of GDP) and is forcing state banks to finance the deficit, which is creating a serious risk of a full-blown banking crisis.

 

A striking example is the new Lada Iskra car. Despite claims of 90 percent localization, analyses show it consists of Chinese designs, Japanese parts, and leftover French components.

Instead of technological sovereignty, Russia is becoming fully dependent on China and seeing structural archaization of its civilian industries.

 

 

Official statistics report record-low unemployment, but Russians are increasingly searching online for help with delayed wages and how to self-organize vacations. These are indicators of hidden unemployment.

The biggest blow to the public is a shortage of medications. According to surveys, one-third of Russians (33 percent) cannot buy the medicines they need.

 

 

The federal center is forcing subsidized regions to demonstrate fiscal discipline. As a result, they are reducing deficits not by increasing revenue, but by cutting investment programs. For example, Dagestan cut its deficit by 8.6 billion rubles mainly by slashing investments by 7.2 billion.

Additionally, the government plans to reduce the number of company towns receiving support from 321 to 218, effectively abandoning hundreds of thousands of people to their fate.

 

 

Industry and Mining: Industrial growth is slowing, and mineral extraction has fallen by 2.4 percent.

Civilian sectors are hit hardest: automobile production dropped by 14 percent (April 2024 to April 2025), excavator production by 48.6 percent, and titanium products by 45 percent.

Oil production fell by 3.5 percent in the first five months of 2025, and gas production by 3.4 percent. Export revenues have declined. Oil and gas sales fell by 33.7 percent in June 2025 compared to the previous year.

In total, fossil fuel revenues dropped 18 percent compared to last year, in Q2 it is the lowest level since the full-scale invasion began.

 

 

Sales of new cars fell by 27.5 percent in May and 27 percent in Q1.

New home sales dropped by 26 percent in the first half of 2025. The mortgage market is in shock: in June, loan issuance dropped by 66 percent compared to last year and halved over the six-month period.

 

Confidence in the economy has sharply declined across key sectors: manufacturing, construction, trade, and logistics. Inflation expectations among the population remain high at 14 percent, showing a lack of trust in government claims of stability.

 

 

The Russian economy has entered a phase of “managed degradation.” The system has already lost its safety margin and now relies on remaining reserves, manual control, and repression. The most likely scenario by the end of 2025 is a continued slow slide into recession, obscured by manipulative statistics. Living standards will fall, but the system will remain governable. The Kremlin will continue extracting resources from the civilian economy and population to fund the war.  

 

 

 

Fiscal cliff. A sudden drop in oil prices or increased sanctions against the "shadow fleet" could lead to a collapse of the budget. The exhaustion of the National Wealth Fund would force the government to turn on the "printing press," which would cause hyperinflation.

 

Social explosion. Although unlikely in the short term, the risk is growing. The collapse of communal systems in winter, mass unpaid wages or shortages of necessities could trigger simultaneous local protests in depressed regions, which would be difficult for the security forces to control.

 

The limit of the strength of the Russian economy is determined not so much by GDP figures as by the Kremlin’s ability to finance the war without pushing the population to the brink of survival. And that limit is getting closer.

 

 

So, we hold our positions. The end of Russia is approaching!