Russia’s economic crisis starts with coal

This is according to a recent analysis by Resurgam.

Since mid-2024, Russia's coal sector has suffered sharp losses after China cut purchases and imposed tariffs. Profits dropped 65% last year, and nearly half the industry is now unprofitable. “The financial reserves of the coal sector were exhausted last year,” Resurgam reports, with mine closures already underway in key regions like Kemerovo.

The situation is worsened by falling oil revenues. Despite a slight recovery in prices, they still sit 27–30% below budget targets. “The Kremlin has no spare funds to respond,” the report states.

The coal crisis is spreading to the railway sector. In early 2025, 30% of coal transport orders were canceled, leaving nearly 300,000 freight cars idle. Railways, already under pressure from falling imports and rising costs, are now forced to raise tariffs — hitting other industries hard.

Meanwhile, the construction sector is also in decline. New housing starts dropped 24% in Q1 2025, with some regions seeing a collapse of up to 40%. There’s simply no volume of goods to move, says the report.

Businesses are turning to debt. In just the first quarter of 2025, companies issued 1.5 trillion rubles in bonds, with over 3 trillion in payments due this year. Corporate debt now totals a record 87.8 trillion rubles — more than 70% of Russia’s total loan portfolio. Over two-thirds of that debt is tied to the military-industrial complex and is unlikely to be repaid.

Resurgam predicts a coming wave of bankruptcies that could shake the banking system. “As more businesses fail to repay loans, the banking sector will face rising pressure, making refinancing harder and triggering even more bankruptcies.”

In the end, the report concludes, “Russia will hide the scale of the crisis for as long as possible — for political reasons, and to avoid panic in the financial sector.”