Reuters uncovers evidence of Russian economic decline
Photo: Russia's economy is falling (Getty Images)
The largest Russian exporters, including Rusal and Gazpromneft, have reduced their planned volume of railway shipments for 2025. This indicates the real state of the Russian economy, Reuters reports.
As the news outlet notes, the volume of freight transportation, which in 2024 reached a 15-year low, serves as a useful indicator of the condition of the manufacturing sector in Russia's export-oriented economy.
In a document reviewed by Reuters, it is forecasted that Russian railways will transport 36.7 million tons less than the initially planned 1.24 billion tons for 2025.
From January to April 2025, the total volume of freight transportation decreased by 6.8% year-on-year.
Reasons for decline
The tight monetary policy, under which the key rate of the Bank of Russia has been 21% since October, has led to a slowdown in construction activity, the document by the Russian railways states.
High interest rates have also forced steel producers to reduce shipment volumes, according to the report. Among the companies contributing to the reduction in freight volumes are Severstal, MMK, TMK, NLMK, and Evraz.
Steel production, exports, and domestic demand fell in 2024, according to data from the World Steel Association. Production has continued to decline this year.
The document by the Russian railways cites intensified sanctions against metallurgical, forestry, and oil companies, Gazpromneft, Surgutneftegas, and Tatneft, as a negative factor.
The reduction in exports of timber, fertilizers, metals, and petroleum products to China has also affected freight volumes, the document states. Trade turnover between Russia and China has decreased by 7.5% since the beginning of the year.
The document also highlights a decline in demand in other sectors as well, including from the aluminum giant Rusal.
According to a report from the Moscow consulting company Yakov & Partners, export revenues of Russian ferrous metallurgy, which accounts for nearly 5% of the country's GDP, have sharply fallen due to the loss of access to high-profit markets caused by Western sanctions.
As previously reported, the volume of freight transportation by Russian railways in 2024 dropped to a 15-year low.
Earlier, Reuters, citing its sources, noted that Vladimir Putin is increasingly concerned about problems in the wartime Russian economy.
