Mounting economic strain and new sanctions deepen Russia’s financial woes as public confidence in Vladimir Putin’s leadership continues to erode.
Vladimir Putin is facing growing public discontent as Russia’s economy shows fresh signs of decline, with new data suggesting that confidence in the country’s financial direction is slipping fast.
According to a recent Gallup poll, only 48 percent of Russians now believe their local economy is improving — a sharp drop from 56 percent last year. Nearly 40 percent say conditions are deteriorating, reflecting deepening unease over inflation, high interest rates, and slowing industrial output.
Economists warn that the country’s manufacturing and defense sectors, both critical to sustaining Russia’s war effort in Ukraine, are showing “first signs of stagnation.” The Institute for the Study of War (ISW) has also reported that regional governments are cutting one-time recruitment bonuses, signaling that Moscow may soon resort to compulsory mobilization of reservists amid rising fiscal pressure.
Maxim Reshetnikov, Russia’s Minister of Economic Development, cautioned in June that the country was “on the brink of a recession” as firms struggle under surging borrowing costs. A mounting wave of bad debt has raised fears of a looming financial crisis.
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In a bid to stabilize markets, the Central Bank of Russia recently cut its key interest rate by 50 basis points to 16.5 percent — its first policy shift since the government announced a major tax overhaul. From 2026, the value-added tax (VAT) rate will rise from 20 percent to 22 percent, while the annual revenue threshold for firms required to pay VAT will be reduced from 60 million rubles (about $749,000) to just 10 million rubles (about $125,000).
The central bank also raised its inflation forecast for 2026 to between 4 and 5 percent and projected higher average interest rates — up to 15 percent — as price pressures persist.
Adding to Moscow’s woes, President Donald Trump this week imposed sweeping sanctions on Russia’s two largest oil producers, Rosneft and Lukoil, after a planned summit with Putin in Hungary was abruptly cancelled. The measures threaten to cut companies trading in Russian oil off from the dollar-based financial system, affecting major buyers such as India and China.
Meanwhile, Russia’s Federal Security Service (FSB) has accused exiled businessman Mikhail Khodorkovsky and 22 members of the Anti-War Committee of plotting a coup against Putin — a claim dismissed by analysts as evidence of growing paranoia within the Kremlin.
John Herbst, former U.S. ambassador to Ukraine and senior director at the Atlantic Council, told The Telegraph that the accusations “show a government under pressure and increasingly fearful of its own citizens.”
Africa Daily News, New York
