Russia economy meltdown as 486,000 businesses vanish since start of Ukraine war

Russian President Vladimir Putin (Image: Getty)

The number of registered businesses in Russia has slumped to its lowest point since 2010, according to Ukraine's foreign intelligence service (SZRU). It claims Russia has lost approximately 486,000 business since 2022, leaving the country with 3.17 million business enterprises operating across the country, as of September 1, 2025.

Russia's economy is has been coming under huge pressure during recent months. In July, GDP grew just by 0.4% on the previous year and growth in corporate profits has weakened, while real wages have also decelerated, The Economist has reported. Trade sanctions have also limited access to markets for businesses, leading to dampened economic opportunities.

The SZRU) blamed Russia's high interest rates, which Moscow significantly increased in 2023 and 2024 to curb soaring inflation, as reported by the Kyiv Independent.

While in September 2022, interest rate stood at 7.5%, but it soon skyrocketed to 21% and remained at such levels for over half of 2025. On September 12, Russia's Central Bank announced its third interest rate cut of the year, reducing the key rate from 18% to 17%.

Another reason cited was "increased tax control". According to Reuters' sources, the government is considering raising the VAT rate from 20% to 22% to reduce the budget deficit. T

he SZRU reported that businesses in the trade, construction, and industrial sectors have experienced the highest closure rates since the start of the full-scale war. It added that, at current levels, 1.5 times more businesses are closing than opening.

Additionally, a new survey conducted among more than 300 professionals across Russia by job sites Robota.ru and SberPodbor showed only a quarter of respondents were planning to expand headcount from September - a huge drop from 56% at the end of last year.

Despite economic challenges, Moscow has shown no indication it is ready to halt Ukraine war (Image: Getty)

To increase international pressure, on September 19, the European Commission announced its latest proposed package of sanctions against Russia, focusing on banks and energy revenues.

Under pressure from the United States, the Commission is also calling for a full ban on imports of Russian liquefied natural gas (LNG).

According to Reuters, the ban would take effect in January 2027 — a year earlier than the previously planned phase-out of Russian energy imports.