Business sentiment among Russian companies has fallen to its lowest level since April 2022

The downturn in Russian industry is deepening amid a collapse in business confidence in the economy’s future. 

According to S&P Global, the Purchasing Managers’ Index (PMI) fell to 48.3 points in March, indicating contraction in the sector. Companies are widely complaining about weak demand and a decline in customer purchasing power, causing business expectations to drop to their lowest level in four years.

The decline in new orders has forced companies to sharply reduce purchases of raw materials and components—the rate of decline in purchasing activity has reached its highest level since spring 2022. Manufacturers cannot fully pass on rising costs to buyers due to high competition and limited demand, leading to stagnation. According to analysts’ estimates, industrial production in Russia has already contracted by 0.8% in the first two months of the year, and the likelihood of a decline in real GDP in the first half of the year remains high.

Pessimism is spreading not only to industry but also to the consumer sector: the consumer sentiment index in Russia has turned negative for the first time since the end of 2022. The Russian Ministry of Economic Development has acknowledged that its previous growth forecast of 1.3% was too optimistic and is preparing to lower it. Experts forecast prolonged stagnation in the range of 47–49 points on the PMI index, as a rapid return to growth amid sanctions and military spending does not appear feasible. At the same time, growth in output prices is slowing, which is a direct consequence of the exhaustion of effective demand among the population.

After three years of unexpected economic growth, Russia is facing a sudden slowdown—war costs, inflation, and falling oil prices have begun to weigh on an economy that until recently seemed resilient to sanctions.

Consumer lending in Russia has fallen to a six-year low.