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:
- Historical Minimum: Over the last 30 years, the index has fallen below current levels only three times: during the 2020 pandemic, the 2008 global financial crisis, and the “dark” 90s.
- Prolonged Slump: March marks the 16th consecutive month in which negative expectations have dominated the industry. The collapse began in spring 2024, when the index was at a peak of +22 points.
- Demand Crisis: The main cause of despair among manufacturers is a collapse in demand; its index hit a post-COVID low of -35 points. The situation was worse only during the height of the 2009 global financial crisis.
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.