From steel and coal to cars and railways, Russia’s biggest industries face a slowdown as sanctions, high interest rates, and cheap imports take a toll on its once-booming war economy.
Russia’s war-driven economy is showing serious signs of strain. Across the country’s vast industrial base — from railways and automobiles to coal, metals, and cement — major companies are cutting working hours, furloughing employees, or trimming staff. The downturn reveals the growing cracks in a system stretched by Western sanctions, falling demand, and a surge of cheap Chinese imports.
Factories Cut Hours, Not Jobs — Yet
Several of Russia’s biggest firms are trying to avoid mass layoffs by introducing shorter workweeks. Cement producer Cemros, for instance, has shifted to a four-day workweek until year’s end. “This is a necessary anti-crisis measure,” said company spokesman Sergei Koshkin, emphasizing that the move aims to preserve jobs amid a sharp fall in construction and a flood of imported cement from China, Iran, and Belarus.
Other industrial players — including Russian Railways, GAZ, Kamaz, and Avtovaz — have followed suit. Each has reduced working days to curb wage costs, reflecting shrinking orders and weakened export markets. Even Alrosa, the world’s largest diamond producer, has cut 10% of its non-mining staff and paused operations at less profitable sites.
Economic Growth Slows as Sanctions Bite
The broader picture is bleak. According to the Center for Macroeconomic Analysis and Short-Term Forecasting, non-military sectors have contracted by 5.4% this year. Russia’s GDP growth is expected to drop to 0.7%–1.0%, down sharply from over 4% growth in 2023 and 2024.
While President Vladimir Putin insists the economy remains stable, experts warn that high interest rates, a strong rouble, and reduced exports are choking industrial growth. Even the mighty Russian Railways, long seen as a barometer of national economic health, has seen revenues decline as shipments of coal, metals, and oil fall.
Regional Struggles and Job Losses
The human cost is mounting, especially in industrial towns where one company often dominates local employment. Wage arrears have tripled year-on-year, reaching 1.64 billion rubles by August. In Siberia’s Kuzbass coal region, 19,000 miners lost their jobs in the first half of 2025 alone. “Wages have been cut everywhere,” said Vladimir, a local coal worker. “They say it’s the crisis — coal isn’t in demand.”
The steel industry is also under pressure. Sources close to the sector report quiet cutbacks, with most factories reducing auxiliary staff to survive. The government is even considering a moratorium on bankruptcies to prevent a wider collapse.
Government Steps In
As economic stress deepens, the Russian government has begun providing targeted support — from tax deferrals and rail transport discounts to state aid for carmakers and coal producers. Similar bailouts in 2008 and 2022 helped cushion past downturns, but experts say the current slowdown may be harder to reverse.
Despite record-low unemployment of 2.1%, the reality behind the numbers is clear: Russia’s war economy is losing steam, and its industrial backbone is feeling the strain.