Russian business formation plummets to 14-year low — Ukrainian intel

Ukraine's Foreign Intelligence Service reported the information.

Closures outpacing openings

"In 2025, only 173,000 legal entities were registered, which is 20% fewer than the previous year. Simultaneously, the number of liquidations sharply increased to 233,000 companies, meaning that a quarter more businesses closed than opened," the intelligence service noted.

Which sectors are suffering most?

Reports indicate that construction, development, retail trade, and intermediary services have been hit hardest. In these sectors, profitability has sharply declined due to expensive credit, reduced demand, and the curtailment of investment programs.

Additional pressure factors

"Additional pressure has been created by rising insurance contributions, increased recycling fees, as well as a downturn in the consumer sector, particularly in offline retail and the automotive business," the statement reads.

The Foreign Intelligence Service adds that systemic economic problems are only intensifying the negative trend.

"Business is facing harsh fiscal policy, strengthened tax control, and a campaign against company 'fragmentation.' Banks, for their part, are limiting lending against the backdrop of high key interest rates, while non-payments from major clients and government entities are increasingly leading to cash flow gaps and bankruptcies. Legal entities are disappearing en masse, giving way to more primitive and vulnerable forms of entrepreneurship, chosen not for development but for survival," the intelligence service added.

Forecast for 2026

It is noted that 2026 is expected to see further reduction in the number of legal entities, market consolidation, and growth in the role of state control.

"Even a possible reduction in the key interest rate, according to the Central Bank of Russia's forecasts, is unlikely to remedy the situation: the economy remains depressed, the investment climate toxic, and entrepreneurial initiative systematically suppressed," the Foreign Intelligence Service concluded.

• Previously, the Foreign Intelligence Service reported that Russia's economic indicators are increasingly signaling a slide toward stagflation. The Russian Central Bank's tight monetary policy has effectively strangled business activity and exacerbated stagnation processes that have already become systemic in nature.