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In 2026, Russia’s economy is entering a phase of so-called “expensive money,” which is becoming a new norm amid the ongoing war against Ukraine and prolonged macroeconomic instability, Ukraine’s Foreign Intelligence Service (FIS) reported.
According to signals from the Bank of Russia, the high cost of capital is expected to persist for a long period, forcing businesses to abandon inertia-based planning, cut investment programs, and tightly control working capital.
Russian companies will be compelled to reassess project payback periods, payment deferral terms, and the real cost of borrowed funds. As a result, even with formally stable demand, caution is increasing and willingness to expand is declining. An additional blow to business will come from tax policy: from January 1, 2026, Russia introduced a higher VAT rate of 22%.
This complicates settlements with counterparties, increases the risk of tax disputes, and raises administrative burdens—particularly painful for small and medium-sized businesses operating under wartime economic conditions.
The labor market remains tight, with more vacancies than available workers. Low unemployment amid mobilization and demographic losses is driving stronger competition for personnel and increasing pressure on payroll costs.
At the same time, an expected slowdown in wage growth is pushing businesses to seek alternatives to the “wage race” through automation, downsizing functions, and higher demands for versatile skills.
Logistics challenges are also intensifying. Mandatory electronic document management and tighter regulation of international transport are increasing the risks of delays and inspections.
For marketplace sellers, the situation is further aggravated by new platform economy rules, higher taxes, and regulatory uncertainty, significantly raising the cost of any mistake.
“Taken together, these factors show that the economic consequences of Russia’s war against Ukraine are increasingly hitting the country’s domestic business environment. Instead of development and investment, companies are forced to focus on survival, legal defense, and risk minimization, indicating systemic economic degradation in the medium term,” the FIS said.
Risk of economic collapse
Previously, Ukraine’s Foreign Intelligence Service reported that Russia’s economy has fallen into a trap of non-performing loans, which could trigger a collapse. The problem is acknowledged even by the Russian government, effectively confirming a high risk of a banking crisis and corporate payment defaults.
The key factor is the hidden growth of bad debt. Even including restructured loans, the real volume of problematic debt has already exceeded 11%, reaching approximately $131 billion.
According to intelligence data, since early 2022 Russia’s aggression against Ukraine has cost Russian taxpayers $550 billion, while overall war expenditures since 2021 have nearly quadrupled.
The FIS notes that Russia’s financial and institutional system is sinking deeper into a state of managed chaos: banks conceal ownership structures, civil servants are exempted from asset declarations, and entrepreneurs are struggling to keep businesses afloat.
In addition to sanctions and the war in Ukraine, Russia’s economy is also suffering from thawing permafrost in strategically important regions, threatening critical infrastructure. Moreover, the country is facing a growing public utilities collapse, driven by years of infrastructure neglect and the redirection of state funds toward the war.
