Russia's civilian economy collapses as funeral services surge amid war crisis
Photo: Funeral business expands in Russia (Getty Images)
Despite efforts by Russian authorities to keep the economy afloat at the expense of the defense sector, the only growing industry in civilian production is the funeral services sector, the Ukrainian Foreign Intelligence Service informs.
According to intelligence data, industrial production in Russia grew by 1.4% year-on-year in the first half of 2025. This growth was mainly driven by state orders for enterprises linked to the military-industrial complex.
The largest increases were recorded in the production of:
- Special-purpose vehicles — 3.4 times higher compared to 2022,
- Electronics and optics — 2.1 times higher,
- Metal products — 1.5 times higher.
The only segment showing growth in the civilian sector is the funeral services industry. Despite demographic decline and losses in the war against Ukraine, this sector grew by 16% in the first half of the year. Its volume reached nearly $425 million between January and April.
Other civilian industries are declining. In June, the overall industrial production index fell by 1.9%. The biggest drops were in the production of:
- Civilian transport (-26.8%),
- Electronics (-8.6%),
- Leather goods (-4.7%).
In July, the industrial optimism index fell below the levels of 2016 and 2022. Sixty-one percent of surveyed experts reported "significantly below normal" production volumes.
The production outlook balance turned negative for the first time since August 2022.
Amid the auto market downturn, KamAZ, following GAZ and AvtoVAZ, is moving to a four-day workweek.
At the same time, sunflower oil exports declined by 38% year-on-year.
The share of companies planning workforce reductions doubled from 6.9% in January to 11.5% in June. The biggest cuts are expected in mining, engineering, and pharmaceuticals.
The intelligence service explained that current trends indicate deep structural imbalances threatening the technological potential of the civilian sector. Meanwhile, the State Duma calls for punishing citizens for "discrediting" domestic products, treating criticism as "unpatriotic."
Russia's economy
Russia's largest exporters have reduced their planned rail shipments for 2025.
Cargo volumes, which hit a 15-year low in 2024, serve as a useful indicator of the state of the production sector in Russia's export-oriented economy.
Earlier, Reuters reported, citing sources, that Russian President Vladimir Putin is increasingly concerned about problems in Russia's wartime economy.
