Amid a deepening economic crisis, Russian officials are attempting to project strength, promising new measures to improve the situation.
On Thursday, July 16, Kremlin spokesman Dmitry Peskov sought to ease concern domestically about the effects of Ukraine’s long-range drone strikes, rather than pretending they aren’t happening.
Tu-160 Bomber from Russia. Image Credit: Creative Commons.
Tu-160M Bomber from Russia. Image Credit: Russian Military/Creative Commons.
What Peskov Said
Speaking to reporters, Peskov said that the difficulties Russia’s economy faces “are well known to everyone,” but added that they “are not of a critical nature.”
“The government and the president regularly discuss them and understand what needs to be done to regulate and improve the situation. Macroeconomic stability is being fully maintained,” he said.
The comments follow the publishing of the Russian central bank’s monthly business survey.
Russian Businesses Sound the Alarm
Peskov’s comments are optimistic to say the least.
The Russian central bank’s latest Monitoring of Businesses survey, published on July 15, paints a bleaker picture of the economy than the Kremlin.
Based on responses from thousands of companies across the country, the survey found that the Business Climate Index (BCI) had fallen from 0.9 in June to -3.6 in July – the weakest reading since the first several months of Russia’s invasion of Ukraine in 2022.
A reading below zero means that more businesses are reporting poor and deteriorating conditions than improving ones.
The findings suggested poor conditions across much of the Russian economy rather than being isolated to a single industry.
Businesses reported receiving fewer new orders, weaker customer demand, and slower production than they had earlier in the summer.
Many companies still suggested they believe activity will improve over the next three months, but the report found they are less optimistic than a month ago.
And at the same time, businesses said they expect to raise prices more than previously anticipated, marking the first increase in pricing expectations in five months.
Although some firms reported that borrowing money had become slightly easier, those improvements are outweighed by the general slowdown in business activity.
In short: it’s bad news for Russia, and unless Ukrainian strikes are more successfully intercepted or cease entirely, the problems are only set to worsen.
The Warning Signs Keep Coming
The news from the central bank isn’t the first warning sign for Russia. In fact, multiple indicators point to a deteriorating economy that could become a full-blown crisis for Russia in the very near future.
Perhaps most concerning among those indicators is the news that Russia’s finances are deteriorating more quickly than previously thought.
Data from Russia’s government budget portal published on Thursday reveals how federal spending in 2026 is now expected to reach 45.11 trillion rubles, up from the 44.07 trillion rubles that were already approved in the budget legislation.
Projected revenue, meanwhile, sits unchanged at 40.28 trillion rubles. That would increase the federal budget deficit to 4.83 trillion rubles – more than 1 trillion rubles over the government’s original forecast.
Data from the Russian Ministry of Finance also show that Russia’s budget deficit reached 5.73 trillion rubles during the first half of the year, equivalent to around 2.5% of GDP and 1.7 times higher than in the same period in 2025.
The figures pose a long-term problem for Russia, with the Finance Ministry having postponed its target of returning to a zero primary budget deficit until 2029.
The Bank of Russia has also repeatedly warned that widening budget deficits pose a threat to the Russian economy, creating inflationary pressure and forcing legislators to choose between stabilizing the economy and financing the war – and that’s precisely the impact Kyiv was looking to make when it began its sustained long-range strikes.
Ukraine’s Strategy Is Working
While Peskov attempts to portray a strong and resilient Russian economy, Ukraine’s long-range strike strategy is working.
On Thursday alone, Kyiv said that it had struck 11 Russian-linked vessels operating in the Black Sea and Sea of Azov, including oil tankers, cargo ships, a gas carrier, and tug boats.
According to Ukraine, that brings the total number of vessels targeted during July to 147 – a culmination of an increasingly competent campaign that is successfully disrupting one of Russia’s most important logistics corridors.
The economic consequences are huge. Russia is already beginning to tighten restrictions on shipping through the Kerch Strait and the Don-Azov Canal.
On Friday, July 10, Reuters reported that grain export industry sources had been informed that Moscow was temporarily suspending shipping through the Don-Azov Canal.
One industry source said Russian border guards had also notified shipping companies that they would no longer accept applications for passage through the Kerch Strait from 6:10 pm local time, without indicating when the restrictions would be lifted.
It’s all bad news for the Russian economy.
With the labor shortage no better and bound to get worse if Moscow orders another mobilization of troops, the Russian economy is struggling by virtually every metric – and the only way it can improve is if the war comes to an end.
About the Author: Jack Buckby
Jack Buckby is a British researcher and analyst specializing in defense and national security, based in New York. His work focuses on military capability, procurement, and strategic competition, producing and editing analysis for policy and defense audiences. He brings extensive editorial experience, with a career output spanning over 1,000 articles at 19FortyFive and National Security Journal, and has previously authored books and papers on extremism and deradicalization.
