Inflation is currently running at 9.9%, diminishing the value of the rouble and Russian citizens’ buying power.
That, analysts warned, means it is “highly likely Russia will spend more on defence than budgeted for in 2025”.
The Defence Intelligence update also warned: “Pressure on businesses will almost certainly increase if interest rates remain high in 2025.”
It also said that civilian firms would bear the brunt of the economic fallout – meaning Russia is even more likely to rely on its military and defence industries.
“The vast majority of any corporate defaults will almost certainly occur in civilian industries, further increasing reliance on the military industrial complex to drive economic activity,” said the update posted on X.
The inflation crisis means many businesses are struggling to repay bank loans and are becoming dangerously overloaded with debt.
In a post on X earlier this week, Kyrylo Shevchenko – a former head of Ukraine’s National Bank – wrote: “Russia’s light industry is collapsing: factories shut down, brands flee abroad, and workers move to military production.
“Businesses cite the war as their biggest challenge, struggling against cheaper, tax-free Chinese imports.
“The final blow? The Instagram ban, which erased up to 90% of sales for small brands.”
Latest figures show that bankruptcies of Russian companies have almost tripled since the beginning of Putin’s full-scale invasion of Ukraine.
Last year, 52,000 firms went bust – up from just 18,000 in 2021.