15 July 2026
The fuel crisis has reduced business activity in the Russian economy to levels seen in spring 2022. The Business Climate Indicator (BCI), calculated by the Central Bank based on a survey of 12,300 enterprises, fell to minus 3.6 points in June from 0.9 in May (zero separates growth from decline).
Both companies’ assessments of the current situation and their expectations have sharply worsened, across most industries and across all business groups (large, medium, and small). The IBC and its components in June were at their worst since April 2022.
At the same time, businesses’ price expectations, which had been declining for five months, began to rise. The annualized rate of price growth, as expected by businesses, increased from 4.3% to 5.8%. This primarily reflects the fuel situation, comments economist Yegor Susin.
Ukrainian drone attacks on Russian refineries led to a 13.5% decline in petroleum product output in May. The resulting fuel crisis hit the mining and logistics sectors, agriculture, trade, and other industries. The Central Bank reports that the main contributors to the decline in business activity were companies in the service, trade, mining, and transportation sectors.
The economy was already slowing down. Economic growth has practically ground to a halt this year: according to the Ministry of Economic Development, it amounted to 0.2% year-on-year in January-May. Industrial production increased by 0.4% over the first five months. However, the bulk of growth has long been concentrated in the military-industrial complex and sectors related to government procurement and import substitution. In other civilian sectors, output has been declining since mid-2024, according to the Kremlin-aligned think tank CMAKS.
To ensure that the military-industrial complex continues to experience any growth, officials are clamping down on all other sectors of the economy, as Elina Rybakova, a senior fellow at the Peterson Institute for International Economics, describes the situation. But the military-industrial complex is also nearing its limits, as Minister of Industry and Trade Anton Alikhanov recently acknowledged . “It seems like we’re scraping together resources from everywhere, but even those resources are dwindling,” Rybakova noted.
After four years of war, the contours of a “true economic endgame” are emerging for Russia, write experts from the Kiel Institute in a report on the state of the Russian economy, titled “Endgame.” The budget deficit amounted to 5.7 trillion rubles over the past six months, but the main problem, in their view, is not so much a shortage of money as a lack of resources; signs of “structural exhaustion” are becoming increasingly evident. There is a shortage of labor, technology, and production capacity, the report’s authors note, and new budget injections are increasingly turning into inflation rather than output growth.
Because of this, the Central Bank maintains a high key rate, and responds to complaints about economic “overcooling” by claiming that business activity is actually growing: the IBC remains positive. Now it’s negative, while inflation, on the contrary, is accelerating. Since the beginning of the year, it has reached 4.6%. Analysts surveyed by the Central Bank sharply increased their inflation forecast: the consensus rose from 5.3% to 6.2% this year and from 4.4% to 4.6% next year. Leading indicators from the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF) signal a high probability of a recession in the coming year, and if one occurs, it will likely last more than a year.
As Ukraine lacerates the mafia oil infrastructure mercilessly and as it hemorrhages nonstop, the mafia business activity will evaporate and cripple its ability to wage war.