Russian economic meltdown as 7,000 companies face bankruptcy | World | News
Russia’s economic crisis is intensifying with thousands of companies reportedly facing bankruptcy. Since the outbreak of full-scale war in February 2022, businesses have faced the double whammy of sanctions and high interest rates.
The basic interest rate rose to a staggering 21% last autumn; this was the highest level since the early 2000s. The Central Bank had to increase the interest rate due to rising inflation, but later reduced it again to 16.5%. Still, Russian businesses are struggling to make ends meet and struggle for existence.
Many are now facing the end of the road as revenues fall while costs and debts rise.
Russian Izvestia newspaper reported that nearly 7 thousand transportation companies are facing bankruptcy.
The article notes that the collapse of shipping companies will increase the economic hardships of ordinary Russians, as a result of which prices for goods and deliveries will likely increase.
Even worse news is that the share of Russian companies with overdue loans has reached a record level of one in four, the daily newspaper said.
High debt burdens, falling profits due to decreasing demand, and increased repayment costs of old loans were cited as the main reasons why companies could not repay banks. All of this doubles the risk of default and further bankruptcies in the near future, the newspaper said.
One manufacturing sector particularly feeling the heat is trucking, where new vehicle sales are falling precipitously.
New data shows the market fell by 47.9% in the first quarter of 2025 and by 63.6% in the second quarter.
In the third quarter, 10,800 heavy pickup trucks were sold, down 60% from the previous year.
Russia’s steel industry is also under great pressure; The country’s largest producer reported a sharp decline in profits and revenues.
Severstal, controlled by billionaire Alexei Mordashov, made a profit of 12.99 billion rubles ($160 million) in the third quarter, down threefold from a year earlier. The industry has been hit hard by sanctions, a decline in the construction industry and fierce competition from China.
