Russian economy meltdown as mortgage costs ‘triple’ and companies launch mass-layoffs

’s economy is in danger of unraveling, with industrial output plummeting and major companies initiating large-scale layoffs as the toll of three years of war with takes its inevitable toll.

The latest PMI data reveals contraction across both the service and manufacturing sectors, with the manufacturing index falling from 53.1 points to 50.2 in just one month — a clear sign of a faltering economy.

According to analysts, the two-decade high of 21% and the economic fallout from the are exacerbating the situation, pushing the Russian economy towards a deep and dangerous slowdown.

Olga Petrova, managing partner of VIZIVI Consult, one of ’s leading recruitment agencies, told independent Russian news outlet : “Several companies are talking behind the scenes about cutting up to 40-50% of contracted staff, including IT specialists.”

The layoffs have been stark, particularly in sectors once thought to be immune. The military-industrial complex, already straining from the cost of war, has been hit hard as production targets falter. Meanwhile, in the private sector, companies like internet giant VK, mobile operator МТС, and energy titan Gazprom are all making cuts.

Anastasia Ovcharenko, a partner at Kontakt InterSearch , warned: “It’s likely that IT specialists working on investment projects with uncertain prospects will be released.

“These projects will be closed and their resources redistributed, but there won’t be a big story where all tech staff are fired.”

The collapse is also spreading to medium-sized businesses, particularly those carrying high debt loads. These companies are buckling under the weight of unsustainable borrowing costs, pushing many to slash their workforces to stay afloat.

Ms Petrova added: “There are also layoffs at medium-sized businesses.

“High debt loads under current are leading to cash-flow shortfalls and problems with paying salaries on time. In turn, this causes staff reductions and, in some cases, closures.”

The economic pain is compounded by the human cost of war. ’s military is bleeding through both its ranks and its economy.

With more 200,000 Russian soldiers estimated dead or wounded according to the UK Ministry of Defence, Putin’s efforts to bolster the front lines have meant conscripting massive numbers of men, with many sent to fight in the war-torn regions of . Families and industries alike are feeling the consequences.

Natalia Milchakova, senior analyst at Freedom Finance Global, said: “We can’t rule out that in some sectors unemployment might go up slightly, for example if small and medium-sized enterprises leave the market or greatly cut expenditure because they cannot access finance due to high .

“But here, too, layoffs will mostly affect white-collar workers, not blue-collar staff which practically every Russian industry needs.”

The situation has led to a general stagnation in wages. While the government touts minimal wage growth as a success, experts agree that the reality is far bleaker.

Olga Shamber, a partner with recruitment company Get experts, said: “The wage race will likely run out of steam this year. Salaries will rise, but not as fast as before.”

Anastasia Ovcharenko, a partner at Kontakt InterSearch , added: “Business is caught between a rock and a hard place. On the one hand, high and expensive loans.

“On the other, this also affects the lives of employees.

“If previously they could get a at 10%, now they can only get one at 30%, and that means they will demand more money from their employers.”

The death toll, widespread economic distress, and the mounting costs of the war are conspiring to push into a state of near economic collapse, some analysts believe.

Oleg Buklemishev, a Russian economist who currently the Director of the Economic Policy Research Center at Moscow State University warned: “There is no longer enough of a profit margin to significantly increase workers’ salaries. There will be no profit cushion to make this possible.”