Russia’s Economy in Decline: Key Industries Hit by Widespread Demand Collapse

Widespread Demand Drop Hits Russia’s Construction and Core Economic Sectors

According to Главком: Russia is experiencing a systemic decline in demand across its construction industry and several other vital economic sectors. The most significant contraction is occurring in infrastructure projects, driven by a range of economic challenges. This information comes from Nikita Klimantov, head of investor relations at Severstal, as reported by Glavkom.

The downturn is affecting nearly every segment of the construction sector. Klimantov explains:

'If we look at percentages, the situation in construction is broadly similar across the board: different subsegments are only showing varying depths of demand decline.' Nikita Klimantov

He notes that 'as far as we know, it is infrastructure projects that are suffering the most right now.' The cement industry is in a deep crisis, and the entire building materials sector is facing severe difficulties. A slump is also evident in machinery manufacturing, while falling demand is recorded in the energy sector-where steel consumption is dropping-and in the oil and gas industry.

Klimantov adds, 'we are seeing the postponement or cancellation of some investment projects, which is negatively impacting sales of oil and gas pipes and related products.' Furthermore, in 2025, profits at major fast-food chains have fallen by 15% to 60%. The number of coffee shops has dropped by 13%, with customer visits declining by 20%.

Reasons Behind the Food Service Market Decline

The downturn in the food service market is attributed to:

• rising business costs,
• logistics problems,
• and a drop in household purchasing power.

Currently, up to 40% of Russians are living near the poverty line, with food expenses consuming nearly 39% of the average family budget. These factors highlight serious economic troubles affecting multiple sectors across the country.

Recent data on falling demand in Russia’s key economic sectors points to an escalation of the economic difficulties the nation faces. Rising poverty rates and shrinking consumer purchasing power could lead to further cuts in investment and slower economic growth. Experts predict that without major reforms and economic stabilization, the situation is likely to remain challenging in the near term.

The ongoing economic challenges are not only impacting the construction and energy sectors but also leading to significant contractions in various industries. For a deeper understanding of how Russia's economy is facing its first contraction since the onset of the war, with critical sectors experiencing sharp declines, read more in this detailed analysis on Russia's economic downturn.