Russia's economy in the crisis: Putin is fighting impending bankruptcy wave!

Russia's economy in the crisis: Putin is fighting impending bankruptcy wave!

The economy of Russia faces a serious collapse. Vladimir Putin's attempts to fight the alarming high inflation have so far failed - the inflation rate is currently 9.3 percent and is further heated by the weak ruble, reported merkur . Putin's decision to increase the key interest rate to dizzying 21 percent should make loans unaffordable so that demand drops. Instead, there is a threat of a wave of corporate insolvencies, especially in the economically critical armaments industry and in retail. According to alarming reports from the Washington Post, over 200 shopping centers are faced with bankruptcy, a quarter of all shopping centers could close in 2025.

An additional problem is the shortage of skilled workers, which puts pressure on the already battered armaments industry. This industry not only struggles with increasing financing costs, but also with western sanctions that hinder their access to important components. According to Alexandra Prokopenko, a former advisor to the Russian Central Bank, many suppliers in the armaments industry suffer from payment failures and falling orders. The recent progress in the economy, which is already stagnating due to the pandemief mugs and geopolitical tensions, are also worrying. Historically speaking, raw materials such as oil and gas are crucial for the Russian economy, and the dependence on these markets could prove to be an Achilles heel, as wikipedia .

The expectation of an insolvency wave in closed sectors could not only destabilize the market environment, but also have a direct impact on Putin's military production, since state defense spending by 2025 should increase up to the highest level since the Cold War. The existing structures are peppered with problems that are shaped not only by inflation, but also by the political and economic isolation of Russia. The next few months could be crucial for whether Putin is able to brake the economic descent or whether Russia is finally catapulted into a deeper crisis.