The Russian economy collapsed by 21%: reasons for the sharp drop in revenue

According to hvylya.net: In October 2025, the revenue of Russian companies and individual entrepreneurs collapsed to 82.5 billion dollars, which is 21.3% less compared to the previous month. According to the Ukrainian Foreign Intelligence Service, legal entities lost about 17.2 billion dollars in income, individual entrepreneurs – 4.8 billion dollars. The number of cash receipts decreased by 22.4%, indicating a sharp decline in business activity in the country.

The main factors behind the decline were a critical reduction in consumer demand and mass evasion of businesses from official accounting of operations. Sales of essential food products in physical terms fell by 5% in September-October 2025, while milk sales decreased by 8%, buckwheat – by 9%, rice – by 10%.

At the same time, an increasing number of entrepreneurs consciously avoid registering operations in cash systems, moving their businesses into the shadow sector. This has been a reaction to the Russian government's plans to sharply reduce the threshold income level for the simplified tax system starting January 1, 2026.

“The new threshold will be reduced from 738.6 thousand dollars to just 123.1 thousand dollars per year – almost six times. The initiative aims to increase tax revenues to the budget, which has been drained by the war against Ukraine, but actually stimulates a mass transition of businesses 'into the shadows'.”

According to estimates by the Ukrainian Foreign Intelligence Service, a revenue drop of more than 20% in one month reflects a slowdown in cash flow in the economy, a sharp decrease in the purchasing power of the population, and a rapid rise of the shadow sector. The share of the shadow economy in Russia may increase by 10-15% by mid-2026, further complicating the fiscal situation in the country and reducing budget revenues, despite the government's attempts to strengthen tax pressure.

In summary: The revenue of Russian companies fell by almost a quarter in October 2025 due to reduced consumer demand and businesses evading taxes. This may lead to an increase in the shadow economy and further complicate the fiscal situation in the country.