Summary
Russian businesses are facing severe financial stress as the Central Bank of Russia’s interest rate hits 21%, with further hikes expected.
High borrowing costs, especially for companies with floating-rate loans, have pushed many towards a debt crisis, with interest payments consuming up to 75% of earnings.
Rising corporate bankruptcies, late payments, and stalled investments signal deepening economic distress. Key industries, including retail, real estate, and manufacturing, are especially vulnerable.
The situation is expected to worsen as the economy cools and interest rates remain high, potentially triggering a financial crisis.
I keep seeing news that the Russian economy is perfectly fine… no, wait it’s in shambles… no it’s actually even better than before… no, people can’t even find bread… no, sanctions are killing it… and so on. And this is not even from different sources; different articles on the same (I hope reputable) sources.
I know that it’s hard to get a read of these things even when not in the middle of a war with lots of disinformation happening on both sides. And I also know that indicators of the economy are tricky to read and often in contradiction. But these swings are so extreme that I don’t know what to make of these articles any longer.
“Politics in Russia is like watching two dogs fight under a rug. You can hear and see that something is going on, but aren’t able to tell the victor until the bones are revealed.”
I view it like an over-revved car. Some parts can handle the strain fine, others are over stressed. Depending what aspect you look at, you will get different results.
As the pressure rises, things will start to fail. Some will not cause additional issues, but others will cascade. Predicting when a cascade failure will happen is difficult, however.
But when it does it will be sudden and complete.
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