2 October 2025
Business activity in the Russian economy continues to decline. The manufacturing purchasing managers’ index, calculated by S&P Global based on company surveys, fell again in October , to 48 points. This marks the fifth month in which it has fallen below the 50-point mark separating growth from contraction.
“While the economy is being ‘manageably’ cooled by the combined efforts of the Central Bank and the government, the private manufacturing sector is experiencing a typical recession, with a decline in output, new orders, and prices,” comments economist Dmitry Polevoy.
The decline in business activity was the sharpest since July, with production volumes declining for the eighth month in a row (albeit slightly slower than in September), and the decline in new orders was also the fastest in three months, according to S&P Global. Polevoy calls the decline in orders “generally significant by historical standards.”
Demand is falling due to customer financial difficulties, writes S&P Global, calling the decline in production and new orders sustainable. Businesses are increasingly using optimization strategies, notes Denis Popov, chief analyst at Promsvyazbank. In an effort to support sales, companies have reduced selling prices, albeit slightly—for only the second time in three years—and to reduce costs, they have reduced inventories. However, their costs also grew at the slowest rate since February 2009. MMI analysts conclude that there is no positive outlook on any front except prices.
Concerns about financial difficulties among consumers have tempered entrepreneurs’ optimism: their confidence in their ability to increase production within a year has plummeted to its lowest level since May 2022. It was precisely these expectations that kept the PMI in positive territory for a long time, even as output was already declining—a characteristic of Russian businesses and the general public.
There are no signs of improvement yet, despite the already significant reduction in the key rate (from 21% to 16.5%), Popov notes. The period of ultra-tight monetary policy was very long, and the prospects for its slow normalization have begun to undermine business optimism, he explains.
The authorities continue to categorically deny a recession. Central Bank Chairwoman Elvira Nabiullina called for a very responsible approach to discussions about it. The Business Climate Indicator (BCI), calculated by the Central Bank based on a survey of over 10,000 enterprises, remains positive: in October, it stood at 2.6 points (1.2 points in September; a reading greater than zero indicates growth in business activity). Current situation assessments have been negative for a year now, but the index itself remains positive due to expectations.
Polevoy suggests that the contrast with the PMI and other data may reflect the presence of “specialized” industries in the Central Bank’s sample. It’s unlikely that military-industrial complex enterprises would tell American researchers anything during a war. “The PMI survey likely covers exclusively the private sector, excluding the military-industrial complex and related industries, and therefore may reflect the state of the civilian portion of the manufacturing industry,” Polevoy reasoned .
The military-industrial complex is growing, while the civilian sector is declining, noted VTB Group Chief Economist Rodion Latypov, citing Uralvagonzavod’s recent decision to transfer some employees to a four-day workweek. The company explained that this measure “affects a limited number of specialists involved in the civilian segment,” but will not impact the fulfillment of state defense contracts .
Piss-poor! ruSSia’s economy must be in ruins to convince me.
It’s getting there, Mike. Imagine its economy being a highrise building, collapsing in slow motion, meaning it’s not only happening, but unstoppable.