War destroys business in Russia: companies give creditors 39% of profits
russian business is in the worst financial condition since the full-scale war began. In September, companies paid a record 39% of their profits in loan interest. Over two years, debt burden has more than tripled.
▫️ Profits of russian companies are falling: in the first 8 months of the year, financial results decreased by 8.3%, while losses increased by 30%. The total volume of loans and bonds reached 99.3 trillion rubles (approximately $1.2 trillion). Against this backdrop, industrial profitability has fallen to the level of the COVID crisis.
▫️ After the russian economy reoriented towards the war, civilian sectors lost access to cheap resources, and high loan interest rates simply “suck out” all profits. The hardest hit are construction, automotive industry, woodworking, and service sectors.
Industrial stagnation, falling domestic demand, and unbearable debt burden for businesses create a combination that is pushing russia into a deep economic crisis, and as long as the war continues, this trend will only intensify.
