System Resources

Deripaska’s Aluminum Empire Turns Unprofitable for the First Time in 11 Years

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The Russian aluminum giant Rusal reported a net annual loss of $455 million for 2025, marking its first negative result since 2014. Although revenue increased by 17% to $14.1 billion due to a late-year spike in global metal prices, it was not enough to offset a massive surge in costs. The company’s finances were hit by a 71% increase in debt servicing costs, a 12% rise in production costs, and a 25% jump in commercial and logistics expenses. Consequently, Rusal reduced aluminum production by 1.9%, citing “capacity optimization.” Sanctions have also shifted sales geography: the European market share dropped from 21% to 14%, while China now accounts for 35% of all exports. Analytical summary: Rusal’s loss in March 2026 clearly demonstrates that even high global prices cannot compensate for the structural flaws in Russian industry. Rising debt and logistical bottlenecks are making metal exports increasingly unprofitable. While pivoting to China saves sales volumes, it leaves the company heavily dependent on Beijing’s pricing power. Even with existing EU quotas, the toxic sanctions environment has driven the “cost of survival” high enough to wipe out all profits.

Real Poverty Level in Russia nears 40% Based on Public Perception

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The real level of poverty in Russia may be significantly higher than official statistics suggest. While Rosstat claims the poverty rate dropped from 7.1% to 6.7% last year, Levada Center surveys show a different trend: the share of Russians whose income exceeds their perceived minimum required for survival fell from 48% to 41% in March 2026. The discrepancy lies in the definition of “subsistence.” The official poverty line is set at 17.1–18.6k rubles, whereas citizens estimate the necessary minimum at 43.8k rubles per person. According to income distribution data, 39.7% of Russians fall below this self-defined threshold. Furthermore, the average per capita family income is only 37k rubles, failing to meet even basic subsistence expectations. Expectations for a “normal life” have also seen record growth, reaching 80.1k rubles per month — a 21% annual increase, the highest since 2009. The threshold for being considered “wealthy” jumped by 40% in a year to 357.1k rubles per person. Analytical summary: The rise of the subjective poverty threshold to 40% in March 2026 highlights a profound crisis of confidence in official economic indicators. Amidst inflationary pressure and military spending, real incomes no longer meet even the minimum requirements for basic subsistence. For the EU and international observers, this signals growing internal social tension in Russia, masked by statistical manipulations but inevitably leading to the degradation of the domestic consumer market.

Ruble falls to multi-month lows as state currency support vanishes

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дефицита The Russian ruble has begun its fifth consecutive week of decline despite a sharp rise in Russian oil prices, which are trading above $70 per barrel at Russian ports and nearly $100 in India. On the Moscow Exchange this Monday, the yuan hit a peak since September of last year (11.84 rubles). The over-the-counter dollar rate reached 81.51 rubles, while the euro exceeded 93 rubles for the first time since January 2026. Analysts attribute this weakness to a reduction in state support for the exchange rate. On March 4, 2026, the Ministry of Finance suspended currency sales from the National Wealth Fund (NWF) under the “budget rule” to preserve the fund’s remaining assets, from which two-thirds of liquid assets have already been withdrawn to plug budget gaps since the war began. Budget deficit vs. exchange rate stability Vladimir Chernov of Freedom Finance notes that the market has lost a regular supply of foreign currency from the state, estimated at 200 billion rubles. This loss of liquidity automatically increases volatility and puts downward pressure on the ruble. Andrey Khokhrin, CEO of Ivolga Capital, highlights a fundamental contradiction: a strong ruble is incompatible with Russia’s chronic budget deficit. To cover financial shortfalls, a weaker currency is more beneficial for the state, as it translates export revenues into a larger amount of rubles. Analytical summary: In March 2026, the Russian currency market entered a phase of “manual control” due to the depletion of NWF reserves. The ruble’s weakening despite high oil prices confirms that the regime’s fiscal interests (budget filling) now dominate over macroeconomic stability, which will inevitably spur inflation and further reduce real household income.

Yandex cuts costs amid consumer market degradation and sanction pressure

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Russian tech leader Yandex is beginning staff optimization and a project portfolio review in 2026. According to Kommersant, hundreds of specialists in the key “Search and AI” division face potential dismissal. Despite a formal group revenue increase of 28% (to 436 billion rubles), growth in the strategically vital search segment slowed to 4%, signaling stagnation in the domestic advertising market. Q4 reporting revealed systemic losses in 6 out of 12 key divisions. The largest EBITDA deficits were recorded in “e-commerce” (-8.163 billion rubles) and “autonomous technologies” (-4.888 billion rubles). The latter is directly linked to sanction restrictions on the import of high-tech components and chips, making the development of self-driving vehicles economically unsustainable. Toxic atmosphere for IT investment IT market experts, including Darya Tsiruleva of KORUS Consulting, note a 10-15% reduction in IT budgets. Under isolation and instability, “there is less money in the economy,” and investors demand immediate returns, blocking long-term innovation. While Yandex officially claims its workforce grew to 31,500 in 2025, industry analysts view current cuts as an attempt to shed unprofitable assets resulting from the inability to scale business into Western markets. Analytical summary: For the European Union, the Yandex crisis is a signal of sanction effectiveness in the tech sector. Stagnation in search and losses in innovative divisions confirm that the Russian tech giant is losing its role as an “engine of modernization,” devolving into a local service maintaining basic digital infrastructure within a collapsing consumer market.

Russians withdraw over 1.1 trillion rubles in cash in one month amid connectivity failures

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Massive bank card blocks and regular mobile internet outages have triggered a record shift toward cash transactions. In January 2026, Russian bank clients withdrew more than 1.6 trillion rubles from their accounts, the highest figure since March 2022. Meanwhile, less than a third of this amount—only 468 billion rubles—returned to time deposits, according to Bank of Russia data analyzed by RBC. The total net outflow of liquidity from the banking system amounted to approximately 1.1 trillion rubles. Experts, including Alexander Abramov from RANEPA, note that such distrust in digital payments and the return to paper banknotes have not been observed in Russia since the mid-2000s. Risks to the stability of the financial system Ongoing problems with the internet and connectivity could further drive public demand for cash. According to the forecast by Evgeny Goryunov of the Gaidar Institute, the current dynamics pose a direct threat to the stability of the banking sector. If the withdrawal of funds becomes a long-term trend, banks will face an acute liquidity shortage. The situation is exacerbated by the fact that the digitalization of the economy, a key focus for decades, has proven vulnerable to technical failures and infrastructural limitations. Citizens prefer to keep savings “under the mattress,” fearing a total loss of access to their assets amid unstable payment service operations. Analytical summary: The mass exodus into cash totaling 1.1 trillion rubles signals a systemic crisis of confidence in the state’s digital infrastructure. In 2026, this will lead to the growth of the shadow economy and limit banks’ lending capacities, forcing the regulator to introduce new restrictive measures to retain capital within the system.

Gazprom starts manufacturing refrigerators following collapse of gas exports

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The Bosch household appliance plant near St. Petersburg, now managed by Gazprom subsidiary Gazprom Household Systems, resumed refrigerator production in May 2025. The enterprise has already established the manufacture of over 30 models and delivered an initial batch of 30,000 units to major Russian retailers such as M.Video-Eldorado and DNS. Plans for 2026 include increasing production to 100,000 units, reaching 220,000 by 2027. Additionally, the company is preparing to launch production lines for washing machines. This sharp diversification of the gas giant’s activities occurs against the backdrop of an unprecedented crisis in its core business—energy extraction and export. Export model crisis and loss of the European market By the beginning of 2026, Gazprom’s list of foreign clients had dwindled to just four countries: Hungary, Slovakia, Turkey, and China. Pipeline gas export volumes have remained at the minimums of the late 1980s for the third consecutive year. According to BCS estimates, exports in 2025 amounted to only 78 billion cubic meters, nearly three times lower than the peak figures of 2018 (200 billion cubic meters). Deliveries to Europe have plummeted to levels not seen since the early 1970s, totaling just 18 billion cubic meters last year. Despite record purchases by China via the Power of Siberia pipeline (38.8 billion cubic meters), the eastern direction compensates for only one-fifth of the lost European market. Analytical summary: Gazprom’s pivot to manufacturing household appliances symbolizes a forced attempt to utilize excess financial and administrative resources amidst the collapse of exports. In 2026, this strategy will fail to compensate for the multi-billion dollar losses in gas revenue but will solidify the trend of nationalizing niches vacated by departing Western brands.

Rubel falls to six-month low despite easing of US sanctions

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Despite the easing of US sanctions against Russian oil and the rise in prices for domestic grades to $70-80 per barrel, the ruble accelerated its decline against key global currencies. On Friday, the yuan exchange rate on the Moscow Exchange rose to 11.69 rubles (the highest since September), the dollar on the over-the-counter market climbed to 80.66 rubles, and the euro to 92.47 rubles. Since the beginning of March, the ruble has lost almost 5% against the yuan and about 4% against the dollar, closing in the red for the fourth consecutive week. The primary driver of this weakening was the decision to halt currency sales from the National Wealth Fund (NWF) to cover the budget deficit. Suspension of currency interventions and the state of the NWF The Ministry of Finance suspended currency sales as of March 6, which in recent months had reached a record $2 billion per month. According to VTB estimates, this decision could weaken the ruble by another 10% against the yuan. This measure is intended to preserve the remaining assets of the NWF, whose liquid assets have decreased 2.5 times since the start of the military conflict, while foreign currency reserves have fallen to their lowest levels since 2008. Analytical summary: The suspension of interventions to save NWF reserves leaves the ruble without support, making it a hostage to the budget deficit. In 2026, this will inevitably trigger an inflationary spiral and further devaluation regardless of oil price levels.

Record growth of Russian business losses at the end of 2025

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The aggregate loss of Russian organizations in 2025 increased by 7.5%, reaching a critical mark of 8.9 trillion rubles. According to Rosstat data cited by Vedomosti, the total number of loss-making companies reached 17,200 (or 27.1% of the market). Against this backdrop, the net profit of the profitable sector decreased by 1.3% to 35.9 trillion rubles, leading to a drop in the total balanced financial result of the entire economy by 3.9% — to 27 trillion rubles. Sectoral degradation of financial indicators The most massive decline in profit was recorded in strategic sectors: motor vehicle production collapsed by 79.7%, freight transportation by 77.4%, and oil and gas extraction by 63.9%. In several industries, the share of loss-making enterprises exceeded the critical threshold of 50%. Leaders in deficit were the coal industry (66.1% of loss-making companies), the utilities sector (63.8%), and hydrocarbon extraction (50.9%), indicating a systemic crisis in profitability. Analytical conclusions and consequences This dynamic is characterized as Усиление давления (Increased pressure) on the state’s resource base. The sharp decline in profit in the extraction sector and the automotive industry testifies to the inefficiency of import substitution and rising costs for logistics and servicing sanction risks. In 2026, this will inevitably lead to a reduction in tax revenues to the budget and a decrease in private business investment activity, undermining the long-term resource of the system.

Record contraction in Russian investment activity over the past decade

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In 2025, the volume of fixed capital investment contracted by 2.3%, marking the deepest decline since 2015. Data from Rosstat and the HSE Development Center record a negative dynamic that intensified throughout the reporting period: from a 6.5% growth in the first quarter to a 5.3% drop in the fourth. The current downturn surpassed even the figures from the pandemic year of 2020, when the decline was only 0.1%, indicating the exhaustion of internal growth resources. Sectoral polarization and project freezes According to an RSPP survey, approximately 15% of companies completely froze their investment programs, while over 60% significantly or slightly reduced them. The main blow fell on sectors with high sensitivity to the key interest rate — construction and transport, as well as extractive sectors (coal and oil & gas industries). Positive dynamics were maintained only in segments focused on the military-industrial complex and pharmaceuticals, confirming the economy’s skew toward the state defense order. Analytical conclusions and consequences This situation is classified as (Increased pressure) on the country’s economic potential. The near-zero dynamic in nominal terms expected by the Ministry of Economic Development in 2026 effectively means a continued real investment downturn due to high inflation. Stagnation of fixed capital investments in civilian sectors will lead to technological degradation and reduced competitiveness, undermining the system’s long-term sustainability and limiting opportunities for real import substitution.

Real estate market stagnation following mortgage program reforms

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Developers sold only 1.6 million sq m of housing in February, a 1.5-fold decrease compared to January figures. Data from “Dom.RF” confirms a sharp cooling: developer revenue dropped by 34% to 333 billion rubles. While the year-on-year decline is less pronounced—13% by area and 11% in monetary terms—the trend toward prolonged stagnation is becoming evident against the backdrop of high interest rates. Market reaction to family mortgage tightening The primary driver of the decline was the change in lending conditions for the most popular subsidized program. As a result, mortgage issuance in February plummeted by 40% compared to the previous month, reaching 285 billion rubles. This liquidity squeeze directly impacted sales figures, forcing developers to revise marketing strategies amid a deficit of solvent demand. Analytical conclusions and consequences Current dynamics indicate the construction industry’s transition into a phase of adaptation to market conditions without large-scale state support. The reduction in funds flowing into escrow accounts could lead to higher project financing costs and the freezing of some new projects in 2026. In the long term, this will limit supply, preventing a decrease in housing prices despite falling consumer purchasing power.