Russia economy in meltdown as its top companies are forced to slash exports

Vladimir Putin faces economic slowdown as Russia’s top exporters slash rail shipments (Image: Getty)

A Russian Railways document seen by Reuters reveals the country's major exporters - including the aluminium giant Rusal and oil producer Gazpromneft - have cut the planned volume of commodities they plan to move by rail in 2025.

This prompted Russian Railways to slash spending by an additional 32.5 billion rubles (£302 million), bringing the state rail monopoly’s planned investment for 2025 to 858.4 billion rubles - down about 3.5% from earlier projections. Russian Railways had already planned to reduce spending this year by 40% compared to 2024, citing rising interest payment costs.

Russian Railways will reportedly transport 36.7 million metric tons less than planned (Image: Getty)

Cargo volumes, which fell to a 15-year low in 2024, are a key indicator of the overall health of Russia’s export-driven manufacturing sector. Russian Railways is expected to transport 36.7 million metric tons less cargo than the originally projected 1.24 billion tons for 2025. The shortfall is attributed to lower shipment volumes from several major companies, including aluminium producer Rusal and steel manufacturers Severstal and MMK.

The document further revealed the Bank of Russia's tight monetary policy - a 21% key interest rate since October - has dampened construction activity. It also noted that higher interest rates have prompted steel manufacturers to scale back on shipment volumes.

There is also reduced demand from aluminium giant Rusal, which is planning to cut annual aluminium output by 250,000 tons due to rising alumina prices. Heightened sanctions on metal, forestry, and oil firms including Gazpromneft were also mentioned as a contributing negative factor.

Russia’s iron and steel sector, accounting for close to 5% of national GDP, has experienced a sharp drop in export earnings after losing access to lucrative markets due to Western sanctions, according to a report by Moscow consultancy Yakov and Partners.

Steel production, exports and local demand dropped in 2024, according to the World Steel Association. That decline has continued into 2025, according to Chermet Corporation.

Exports of wood, fertilizers, and metals to China have also declined, contributing to a 7.5% decrease in total trade turnover between the two nations this year. The document further notes that "third-party interference, primarily targeting oil refineries" - a likely allusion to Ukrainian drone strikes - have further impacted shipment flows.