Russia’s corporate downturn is spreading beyond coal and transport. In the first seven months of 2026, the number of sectors where losses exceeded profits rose from three to 11, while a third of the large and medium-sized organisations covered by official statistics reported a loss.
The figures, reported on 7 October by Izvestia using Rosstat data, do not describe the entire Russian economy. Small businesses, banks, non-credit financial organisations and state and municipal institutions are excluded. But they show a broadening squeeze across industry, finance and consumer services, driven by expensive borrowing, rising operating costs, labour shortages and weaker demand.
The loss-making perimeter widens
Rosstat’s financial-results data cover roughly 70,000 large and medium-sized organisations. About 43,000 finished the January-to-July period in profit, while around 22,000 recorded losses. The share of loss-making organisations rose by 2.8 percentage points year on year, from 30.6% to 33.4%.
Aggregate profits remained substantial. After losses were deducted, the organisations in the sample generated about 13 trillion roubles — 16% less than in the same period of 2025. The picture is therefore not one of universal corporate failure. Rather, a smaller group of profitable activities is carrying a growing number of weaker businesses.
Metallurgy suffered the largest negative balance, with losses exceeding profits by 269 billion roubles. The shortfall reached 247 billion roubles in financial and insurance activities, 178 billion in coal mining and 55 billion in other land passenger transport. In vehicle manufacturing, losses were almost 4 billion roubles greater than profits.
The list of loss-making activities also expanded to include the extraction of materials such as sand, chalk and salt, forestry and logging, sports and entertainment, libraries and museums. That range matters. It links the difficulties facing heavy industry with pressure on household spending and the finances of organisations reliant on local demand.
Borrowing absorbs the money meant for growth
The cost of credit is one of the clearest pressures on company accounts. Although the Central Bank’s key rate has fallen to 14%, business loans often still cost more than 20%. Interest payments are consequently consuming money that might otherwise fund machinery, stock, expansion or modernisation.
Investment in fixed capital fell by 10% in the first half of 2026 compared with the same period a year earlier. Companies facing costly finance and uncertain sales are postponing projects, a rational short-term response that can weaken them over time. Less investment leaves firms reliant on older equipment, expensive labour and less efficient logistics.
Operating costs are rising at the same time. Businesses are paying more for wages, fuel, transport and deliveries. A rise in value-added tax at the beginning of 2026 added to the cost base, while weak demand made it harder to pass those increases on to customers. Raising prices risks further reducing sales, leaving companies to absorb more of the shock through lower margins.
The labour market is adding to the strain. Mobilisation, the departure of some working-age people and the movement of skilled workers towards defence-related industries, where pay can be higher, have contributed to shortages in civilian sectors. Employers must offer more attractive wages to retain staff, but higher payroll costs do not automatically deliver equivalent gains in productivity.
Sanctions leave exporters with longer routes and thinner margins
Sanctions imposed on Russia in response to its war against Ukraine have restricted access to familiar markets, advanced technologies and imported components. Companies have redirected parts of their trade towards Asia and Africa, but that shift has often meant longer routes, more complicated supply chains and higher freight costs.
Additional expenses can arise when businesses use intermediaries or alternative arrangements for cross-border payments. The figures do not show precisely how much of any sector’s losses can be attributed to sanctions alone. They do show an external trading environment adding friction to domestic problems such as high interest rates, labour shortages and rising production costs.
A stronger rouble has made conditions harder for exporters. Its nominal effective exchange rate rose by 12% year on year in January-June 2026. Foreign earnings therefore translate into fewer roubles, while wages, fuel, transport and maintenance costs inside the country continue to rise.
The effect differs from one industry to another. Metal producers face weaker trading conditions and costly inputs. Car manufacturers remain exposed to financing, components and logistics. Transport companies are paying more to operate their fleets. Service providers, meanwhile, depend on consumers who are increasingly reluctant to spend on anything they can postpone.
High savings rates weigh on the domestic market
High deposit rates encourage households to keep money in the bank rather than spend it. That is not, by itself, a direct measure of falling household income. It does, however, make demand more fragile in sectors such as sport, entertainment, museums and libraries, where spending can be delayed or abandoned.
Those organisations face a difficult cost structure. Their revenues can fall quickly when customers become cautious, while wages, rents, maintenance and other operating expenses are harder to cut at the same speed. A modest decline in income can therefore turn into a loss.
The appearance of cultural and recreational activities among the loss-making sectors suggests that the pressure is reaching beyond export industries and manufacturers. The same combination of cautious consumers and stubborn operating costs can spread through the wider service economy, reinforcing the weakness in domestic demand.
Regional finances lose part of their cushion
The deterioration is visible geographically as well as by sector. In 11 of the 85 regions represented in the statistics, organisations’ combined losses exceeded their profits during the first seven months of 2026. A year earlier, that was the case in seven regions.
That shift can affect regional budgets through corporate profit tax. Roughly two-thirds of the tax is allocated to Russia’s regions, so weaker company earnings can reduce the local tax base. Regional authorities may then have less room to fund infrastructure, utilities and social commitments, even when demand for those services remains unchanged.
The regional figures do not establish that every affected territory has become dependent on federal transfers. They do indicate a less comfortable balance between local economic activity and public spending. Where a handful of large employers dominate, a fall in profits can affect tax receipts, jobs and suppliers at the same time.
Russia’s business sector is still producing a substantial aggregate profit, but its margin for error is narrowing. The unresolved question is whether the loss-making trend will remain concentrated in exposed industries or whether expensive credit, scarce labour and cautious consumers will push further parts of the economy into the red.
