System Resources

Billions in losses and mass layoffs: the failure of the “MyOffice” model

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The Russian office software developer New Cloud Technologies (brand MyOffice) is initiating large-scale layoffs. The company’s CEO, Vyacheslav Zakorzhevsky, in a letter to employees dated March 23, 2026, acknowledged “serious financial difficulties” and the need for a radical business restructuring. Financial indicators and the scale of the crisis: Analysis and Conclusion: The collapse of a flagship of Russian software is a signal that the resource of administrative import substitution is exhausted. High development costs combined with a limited domestic market and the impossibility of Western expansion have created a financial trap. Even with state involvement and sanction pressure, Russian corporate users often prefer “grey” schemes for using Western software or free Open Source solutions, making the business model of paid domestic analogs structurally unprofitable without constant state subsidies.

47% drop in oil and gas revenues: Russian budget rule reform postponed

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The Russian government has temporarily suspended the reform of the budget rule, despite the critical state of the treasury in early 2026. According to Reuters sources, the pause is caused by a sharp increase in global oil prices against the backdrop of a military conflict between the USA, Israel, and Iran. The situation in the budget sector remains tense: for January–February 2026, revenues from energy carriers decreased by 47% in annual terms. The budget deficit for the first two months reached 3.45 trillion rubles, which is 1.5% of GDP (with an approved annual plan of 3.8 trillion rubles, or 1.6% of GDP). Key aspects of the current discussion: Summary: The authorities are betting on the external environment and geopolitical instability, hoping to close the budget hole through the “war premium” in oil quotes, instead of carrying out the overdue optimization of expenditures.

Russia Begins Selling Gold Reserves to Plug Budget Holes — First Time Since 2002

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Russian authorities have turned to radical measures to save the federal budget. For the first time in nearly a quarter-century, the Central Bank has begun the physical sale of gold from its reserves. The reason is a catastrophic deficit that exceeded 15 trillion rubles between 2022 and 2025, and grew by another 3.5 trillion in the first two months of 2026 alone. Gold Sale Facts: From “Virtual” Deals to Real Ones:Until recently, gold operations within the National Wealth Fund (NWF) were merely an accounting formality: the Ministry of Finance “sold” gold to the Central Bank, simply moving the metal from one state pocket to another. Now, however, the Central Bank has entered the market with physical bullion (likely domestic or in “friendly” countries), converting strategic reserves into liquid cash. Analytical Summary: The transition of the Central Bank to the physical sale of gold is a clear signal of the critical exhaustion of “currency resources.” The Yuan Deadlock: It appears that the liquid portion of reserves in Chinese yuan has reached a dangerous threshold. The regulator is afraid to “burn through” the remaining Chinese currency, as it is the only tool left to influence the ruble’s exchange rate. Gold has become the last liquid asset that can be directed toward military spending, which has reached levels not seen since the Soviet era. End of the Accumulation Era: The decade spent turning Russia into a “gold fortress” has officially ended. By starting the sale of physical bullion, the Kremlin admits that current oil and gas revenues no longer cover the appetite of the war machine. Risk of “Eating the Future”: If the deficit pace continues (3.5 trillion in two months), the gold reserve could melt away before our eyes. This undermines the long-term stability of the ruble and strips the country of its last strategic reserve, which remained untouched even during the most challenging periods of the last 20 years.

Sentiment Among Major Russian Industrial Enterprises Plummets to 1990s Levels

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Deep pessimism is mounting in Russia’s real sector. The Composite Index of Industrial Optimism, calculated by the Institute of Economic Forecasting of the Russian Academy of Sciences (IEF RAS), dropped to -20 points in March. This decline returns business sentiment to the levels seen during the economic chaos of the 1990s following the collapse of the USSR. Key indicators of industrial depression: According to Sergey Tsukhlo, the author of the index, the current decline in sentiment has taken on a steady and systemic character, reflecting the inability of enterprises to adapt to new economic realities. Analytical summary: The collapse of the industrial optimism index to 1990s levels is a diagnosis for a Russian economy that has finally lost its growth drivers. A situation where demand falls to values last seen twenty-five years ago indicates that even state defense stimulus is no longer capable of propping up civilian and related sectors. Enterprises are facing a “scissors effect”: shrinking sales markets on one side and an inability to plan due to high uncertainty on the other. The fact that this pessimism has lasted for 16 months points to a transition from an acute crisis to a chronic one, which will inevitably lead to the curtailment of investment programs and further technological degradation of production.

Putin Acknowledges Start of Russian Economic Downturn

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The dynamics of Russia’s key macroeconomic indicators turned negative at the beginning of 2026. During a meeting on economic issues on Monday, President Vladimir Putin officially confirmed a drop in GDP, effectively acknowledging the start of a recession. Key crisis indicators: Putin described the situation as “expected” and instructed the government to return the country to growth while avoiding labor market destabilization and surging inflation. Analytical summary: Putin’s admission of an economic downturn is an official signal that the resource of “military Keynesianism,” which sustained GDP through defense orders, has been exhausted. The structural degradation of industry has hit even base sectors—from metallurgy to food processing—indicating a deep systemic crisis. The situation is exacerbated by a “perfect storm”: collapsing export revenues and the inability to curb inflation without further cooling the economy. The revision of forecasts toward stagnation (0.7%) and the impending budget sequestration suggest that the authorities have no tools left to stimulate growth other than direct money printing, which will inevitably lead to social tension.

“The Situation is Very Difficult”: One of Russia’s Largest Steel Companies Shuts Down Nearly Half of Capacities and Prepares for Mass Layoffs

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One of Russia’s top steel giants, Magnitogorsk Iron and Steel Works (MMK), has effectively entered “hibernation mode.” CEO Pavel Shilyaev announced a reduction in capacity utilization to 60%, a complete halt of investment programs, and a suspension of equipment maintenance. As part of cost-cutting measures, the company is firing 10% of its administrative staff. Key crisis factors: The shutdown has affected the entire group structure: the Chertinskaya-Koksovaya mine has been suspended, units at “MMK-Metiz” have been halted, and employees at the Lysva plant have been put on reduced working hours. Management expects no demand recovery in 2026. Analytical summary: The crisis at MMK vividly illustrates the dead end facing Russia’s heavy industry. Metallurgy, which supplies 20% of the domestic market, is trapped between unprofitable exports and stagnating domestic demand. Halting investments and repairs means the company is effectively consuming its own capital: equipment will deteriorate without the possibility of modernization. This signals the start of deep deindustrialization; as industry leaders mothball plants and lay off staff, related sectors like coal mining and machinery will inevitably degrade. Russia is losing its status as a global metallurgical player, becoming an isolated, oversupplied market with negative profitability.

Half of Russians Name Low Income as Their Primary Problem

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Lack of financial resources remains the key difficulty for Russian families. According to a recent Levada Center poll, when asked “what currently complicates your family’s life the most,” 48% of respondents chose “low income.” This was the most popular answer by a wide margin, far ahead of the second-place “poor health and difficulties with treatment” (30%). Official statistics record an increase in well-being: last year, real incomes rose by 7.7%, and the poverty level dropped to 6.7%. However, the subjective perception of the population is radically different. The severity of the problem increases with age: among young people (18–24), 32% complain about income, while in the 40–54 age group, it is exactly 50%, and among those over 55, it reaches 52%. The study revealed a catastrophic gap in the assessment of the subsistence level: Analytical summary: The data confirms a profound disconnect between macroeconomic reports and the social well-being of citizens. The official reduction in poverty occurs through the manipulation of standards, while the real consumer basket costs several times more. For the EU and international observers, this is a clear signal: mobilization-driven income growth (payments to the military and the defense industry) does not compensate for inflation for the majority of the population. The Russian economy faces a paradox: formal GDP growth is accompanied by a mass feeling of impoverishment, which creates hidden social tension and limits the potential of the domestic market.

75% of Russian Small and Medium Enterprises Lack Funds for Development

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The situation for Russian small and medium-sized enterprises (SMEs) is showing a sharp decline: in March, 75% of companies reported having no profit available to invest in their own business. This marks a significant jump from February, when 57% of respondents noted a lack of funds. A monitoring report by the Center for Strategic Research (CSR) also recorded a collapse in the number of enterprises ready to allocate profits to expand production—their share dropped from 29% to just 8.3%. Key barriers to business growth according to respondents: In this environment, 17% of companies prefer to place profits in bank deposits rather than invest. Meanwhile, half of all enterprises are forced to hold back price increases to maintain their market share. According to Rosstat, while the share of companies’ own funds in capital investments reached nearly 59% in 2025 (the highest since 1997), overall fixed capital investment fell by 2.3%, with further declines predicted. Analytical summary: The March data confirms a deep stagnation within the SME sector. The sharp contraction in investment activity indicates that businesses have shifted into “survival mode.” The combination of expensive credit and falling demand strips companies of incentives to grow, forcing them into financial savings (deposits) rather than production expansion. Russia’s model of economic adaptation via small business is hitting a ceiling: without accessible capital and solvent demand, the sector is losing the flexibility required for technological renewal and overall economic modernization.

Kremlin-Linked Economists Warn of Recession Risk by Year-End

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Russia’s economy may slide into recession before the end of the year. A report by the CMASF (a center close to the Kremlin) shows that GDP growth slowed to 1% last year, a nearly fivefold drop from 2024’s 4.9%. The Composite Leading Indicator (CLI) hit 0.49 in December, three times the critical threshold, signaling a potential prolonged recession. Economists cite high interest rates, labor shortages, and an investment hiatus as primary drags. While high oil prices provide a temporary buffer, any price drop or new sanctions could trigger a definitive downturn. Analytical summary: This forecast from a Kremlin-affiliated body effectively admits that the resources of “military Keynesianism” are depleted. The economy is overheated, and prohibitive central bank rates have paralyzed private investment. Russia’s state-driven growth model has hit a ceiling: without access to foreign capital and technology, Russia cannot sustain even minimal growth. Moscow’s strategy now relies solely on external shocks and energy market volatility, as domestic drivers are stifled by inflation and labor deficits.

Market Rupture: Russia Faces Acute Yuan Shortage Amid Liquidity Crisis

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The Russian banking system is struggling with a severe shortage of Chinese yuan, the only major foreign currency still available for unrestricted international trade. On Thursday, overnight yuan lending rates on the Moscow Exchange skyrocketed to 44% per annum. Throughout the past year, these rates hovered near zero, but by mid-March 2026, they spiraled out of control, hitting 20% on Wednesday before the latest surge. The deficit stems from declining export revenues and the Finance Ministry’s decision to halt currency sales from the National Wealth Fund. Banks have exhausted the Central Bank’s 5-billion-yuan swap limit as of March 18. Unlike dollars or euros, yuan liquidity is strictly tied to trade, as Chinese banks remain reluctant to provide direct credit to Russian entities. This shortage has triggered a ruble collapse, pushing the yuan to 12.65 rubles and the dollar past the 86-ruble mark. Analytical summary: The March 2026 currency crisis exposes the inherent fragility of Russia’s “yuanization” strategy. Switching to the yuan has failed to provide stability, as Russia lacks access to deep capital markets, and Chinese institutions remain wary of secondary sanctions. For the EU, this serves as a clear indicator that the Kremlin’s financial buffers are thinning; the inability to secure liquidity even in a “friendly” currency leads to uncontrolled devaluation and rising costs for importers, inevitably fueling domestic inflation.