Reduction in demand for business calls identified as a significant challenge within the Russian business sector.
In the first quarter of 2025, companies across Russia faced a significant hurdle, as demand for their products and services plummeted, according to data from the Russian Union of Industrialists and Entrepreneurs (RSPP). This disheartening trend more than doubled from the end of 2024, rising from 19% to a staggering 38.4%. This concerning issue outweighed all other challenges businesses grappled with.
Although demand in 2024 remained steady, the beginning of 2025 brought about a significant downturn, as the RSPP reported. Alongside the dwindling demand, long-standing issues continued to plague businesses, including restricted access to borrowed funds, insufficient working capital, and late payments from counterparties. Each of these factors was mentioned by just under 30% of the respondents.
Meanwhile, the proportion of companies grappling with external constraints lessened. For instance, the significance of rising domestic product prices dropped drastically, with only 14% of participants citing it, compared to 22% in the previous reporting period. Similar patterns emerged regarding the relevance of price hikes in imported goods and the negative impact of Western sanctions.
Currency instability and subsequent logistical challenges similarly negatively affected a smaller proportion of businesses, while the issues related to new equipment due to import restrictions also decreased significantly. According to a study by PSB RSBI, the level of business activity is decreasing, with 48% of respondents reporting a decline in sales, the highest since May 2022. Sales issues are exacerbated by high interest rates and the dearth of demand caused by these rates, noted Andrei Shubin, the executive director of the business association.
Sectors such as tourism, restaurants, and retail are among the hardest hit, with tourism itineraries getting canceled, restaurant visits decreasing due to inflation, and the retail business experiencing reductions in sales. According to Ekaterina Avdeeva, a member of the general council of "Delovaya Rossiya," the most vulnerable sectors are construction and manufacturing.
The Bank of Russia recently acknowledged the slowdown in aggregate demand in the economy. This downturn is primarily due to tight monetary and credit policies, which curb demand for credit and increased savings behavior. Approximately three-quarters (74%) of the surveyed Russian Union of Industrialists and Entrepreneurs organizations are planning to reduce their expenses.
The majority of respondents aim to trim administrative and general expenses, with more than half doing so on consumed services. Nearly one-fifth of respondents are considering cutting spending on charitable social programs and employee payrolls. "Currently, the only way to maintain a company's solvency is often to reduce expenses," says Ekaterina Avdeeva of 'Business Russia.'
In the context of the financial turmoil, businesses in Russia are grappling with multiple challenges, such as restricted access to borrowed funds and insufficient working capital, which are of concern to about 30% of the respondents (finance, business). Furthermore, the high proportion of companies planning to reduce their expenses primarily focuses on trimming administrative and general expenses, with more than half targeting cutbacks on consumed services (business, finance).
