Russia’s biggest bank warns of 'demographic crisis' in business
Photo: Russian bank Sber (Getty Images)
The Center for Macroeconomic Research of Russia's Sberbank has stated that Russian enterprises are closing en masse this year not for formal reasons, but purely for economic reasons, according to The Moscow Times.
Why this is not the usual "cleaning" of the register
Previously, the number of company liquidations in Russia also always exceeded the number of new openings, but this was mostly a formality — over 80% of closures were attributed to non-operating companies or those that had submitted false data. The Russian tax service actively cleaned the register of legal entities in 2018-2020 and 2023-2024 thanks to new digital control systems.
This year, however, the situation has changed: the number of closures that are much closer to real business decisions has increased — from approximately 5 to 12–15 thousand organizations per month. The main contributions came from reorganization, liquidation outside bankruptcy, and above all, the voluntary closure of small and medium-sized businesses by the decision of their owners.
How sharply the registration of new businesses has dropped
In January–May, 62,000 companies were registered, compared to 80,000 in the same period last year. In May, there were 4.3 registrations per 1,000 active firms, compared to 5.5 closures for economic reasons.
The decline affected almost all sectors, but the main contributions came from trade, construction, and manufacturing – precisely the sectors where small and medium-sized businesses are concentrated.
Why this is happening now
Analysts link the situation to GDP growth, which slowed from over 4% in 2023–2024 to 1% last year and nearly zero this year. In almost all civilian industrial sectors, stagnation or decline has long been ongoing.
Companies can no longer count on state support as they did at the beginning of the war – available reserves are almost exhausted, and the authorities, on the contrary, are trying to cut spending and are looking for ways to fill the budget, whose deficit for the first half of the year amounted to 5.7 trillion rubles.
Because of this, taxes have been raised for two consecutive years: from 2025, corporate income tax and personal income tax increased, and this year – VAT. The revenue threshold below which VAT is not paid was reduced 20-fold – from 450 million rubles to 60 million last year and to 20 million this year. As a result, nearly a third of small businesses this year have considered closing or selling.
The fuel crisis in Russia is deepening due to regular strikes on oil refining infrastructure. Recently, limits on fuel sales were reintroduced in the Volgograd region – the decision was made after a drone attack on the region's largest oil refinery. A few days earlier, the General Staff of the Armed Forces of Ukraine confirmed the strike on this plant – Lukoil-Volgogradneftepererabotka is one of Russia's largest refineries.
