Russian financial system on the point of meltdown as key industries face chapter
The Russian economy is facing a crisis as the country struggles to deal with the double whammy of biting sanctions and record-high interest rates – hitting the lumber industry and mining giant Nornickel
Putin is grappling with an escalating economic crisis as the country battles with severe sanctions and record-high interest rates.
Russian timber firms have lost a third of their export markets due to sanctions, according to recent data.
With inflation skyrocketing, Russia’s Central Bank was compelled to raise interest rates to 21% late last year. Bank officials have not dismissed the possibility of further increases to curb the inflationary surge.
The high interest rates are making it increasingly challenging for companies to repay bank loans, pushing many to the verge of bankruptcy. Adding to these significant difficulties are Western sanctions, which have shut down crucial export markets for Russian businesses.
The latest industry to feel the economic pinch is Russia’s timber sector.
New statistics reveal the industry has lost nearly £5 billion in export revenues after losing a third of its markets.
Kyrylo Shevchenko, the former head of Ukraine’s National Bank, said: “The Kremlin scrambles-tax cuts, state purchases, anything to keep it breathing.
“Profitability hovers near zero, interest rates climb, and shutdowns loom, threatening even stable sectors.
“Meanwhile, steel and coal spiral. The cost of Russia’s war in Ukraine stretches far beyond the battlefield.”
Russia’s timber industry is contributes about 1% to the country’s GDP and the country ranks second globally with 82 billion cubic meters of forest resources, reports the Express.
Another suffering Russian industry mining as Nornickel experienced a significant drop in profit in 2024, due to sanctions and a slump in metal prices. The company saw a 13% decrease in revenue, leading to the cancellation of dividends and cost-cutting measures.
Despite avoiding direct sanctions, Western buyers are shunning Russian metals, resulting in stifled payments and limited access to technology.
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