Each day the war continues pushes Moscow closer to the brink of a severe financial crisis, a watchdog warned.

14:04, Fri, Jul 4, 2025 | UPDATED: 14:14, Fri, Jul 4, 2025

RUSSIA-POLITICS-SECURITY

Russia's economy continues to decline. (Image: Getty)

An acute labour shortage is gripping various sectors of the Russian economy, as Moscow continues to channel its efforts toward the war in Ukraine. The Centre for Countering Disinformation (CDD) under the National Security and Defence Council of Ukraine revealed that the construction industry has been particularly affected.

It said: "Such a problem is being observed in industry, agricultural sector, energy, etc. But urban construction suffers the most from personnel shortage. According to Russian experts, in five to seven years there will simply be no one to build houses in Russia." The CCD pointed out that the large-scale invasion has created a mass exodus of workers into the war effort and defence industry, exacerbating understaffing across many fields.

It added: "In construction, the shortage of workers is most acute - even despite the unprecedented market decline, reduction in construction volumes, mass bankruptcies of developers, and job cuts."

Despite Russian propaganda and assurances from Vladimir Putin regarding "unprecedented growth" within the economy, this is not the reality, the watchdog said.

Each day the war continues pushes Moscow closer to the brink of a severe financial crisis, it added.

Previous reports by Ukraine's Ministry of Economy highlighted that sanctions have also dramatically battered the Russian budget, with a deficit amounting to 90% of the annual projection after just five months into 2025.

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Russia is also facing a "food catastrophe" after grain harvests were reported to have fallen by 12.7 million tonnes in the period up to July.

Data from the Ministry of Agriculture showed grain and legume harvests amounted to just 3.8 million tonnes in the first six months of the year.

This is 4.3 times less than for the same period in 2024 (16.5 million tonnes), according to Roman Nekrasov, a senior official for plant growing at the ministry.

Grain yields were also said to have fallen by as much as 25%. The yield was put at 31 centners per hectare (c/ha), which is 10 c/ha lower than last year (41c/ha).