Moscow’s civilian economy shows growing signs of crisis – Resurgam

International affairs expert Resurgam has weighed in on the situation.

Russia's Road Freight Association reported a 30% drop in freight transport in January-February 2025 compared to the same period in 2024, with some regions seeing a 40% decline. Freight transport is a key indicator of economic activity, and such a drop suggests serious slowdown.

Adding to the troubles, Russia’s Central Bank recorded a sharp decline in imports, with February’s $19.9 billion in imports marking a 13% drop from January and a 30% drop from late 2024. Some claim this reflects “import substitution,” but experts argue otherwise.

If import substitution were truly happening, freight volumes wouldn’t be falling so dramatically, the report notes. Moreover, declining imports should increase foreign currency reserves — but instead, Moscow's export surplus fell by 19% in December 2024, reaching its lowest level since the COVID-19 period.

To cover budget shortfalls, the Moscow government is rapidly depleting its financial reserves. The National Welfare Fund’s liquid assets are 74% exhausted, and funds held in banks have plummeted from 9.99 trillion rubles in January to just 5.846 trillion by mid-March.

The budget deficit has soared, hitting 2.7 trillion rubles in just two months — more than double the full-year target of 1.17 trillion.

With these growing economic pressures, experts warn that lifting sanctions too soon could ease Moscow’s crisis, allowing the Kremlin to stabilize its finances. Keeping sanctions in place at least until September-October will maximize economic strain, the expert concludes.

• Investment banker Serhiy Fursa pointed out that in January and February 2025, transport in Russia dropped by 20-30%, and in some cases by 40%, signaling deepening economic troubles.