Russia's Economic Crisis Deepens as Military Spending Soars and Wages Go Unpaid.

18.01.2026 614

18.01.2026 614

Russia's Economic Crisis Deepens as Military Spending Soars and Wages Go Unpaid

Russia's Economic Woes in 2025

According to UATV: Russia is experiencing a record-breaking crisis of delayed wage payments in 2025, a stark indicator of severe economic distress. This situation is unfolding against the backdrop of a war economy, where military spending has surged by 95% compared to 2023, placing immense strain on the national budget. According to Rostrud, the state labor agency, over 26,000 complaints regarding unpaid wages have been filed since the start of the year, highlighting the acute financial hardship faced by ordinary citizens.

Budget Deficit and Social Spending Cuts

The Russian government's budget deficit, initially projected at 1.2 trillion rubles, is now forecast to balloon to 7 trillion rubles, far exceeding original estimates. Concurrently, planned social support spending has been slashed to just 25% of the budget for 2026, signaling a sharp retreat from welfare commitments. The underlying economic stagnation is evident in the decline of 17 out of 24 industrial sectors by the end of September 2025, jeopardizing the country's future economic development.

Experts are sounding the alarm on the deteriorating conditions. Vladislav Zhukovsky notes that

“no one understands the real scale of poverty,”

while Igor Burakovsky emphasizes that

“2025 is the year the Russian Federation turns in the direction we have long expected.”

Oleg Pendzin also observes that “the National Welfare Fund has been depleted; next, only citizens' pockets remain.” Economist Andriy Novak describes the situation as “practically a heart attack,” and Igor Lipsits points out that “the picture is becoming not as pretty as Putin likes to paint it.”

The combination of skyrocketing military expenditures and deep cuts to social programs has triggered significant changes in Russia's socio-economic landscape, directly threatening the population's welfare in the near term.

The current crisis points to profound structural problems within the Russian economy, with potential long-term consequences for social stability. Faced with shrinking social budgets and expanding military costs, the government is encountering major challenges in maintaining stability and preserving living standards. Without urgent corrective measures to address these economic issues, the country risks increased social unrest and instability.