Ukrainian Intelligence Reports Russia's Economy Entering Deepest Crisis in Decades Amid Industrial Slowdown and Record Deficit

Ukrainian Intelligence Highlights Deepening Economic Woes

The Russian Federation's economy is reportedly entering its deepest crisis in decades, according to an assessment by Ukraine's Foreign Intelligence Service (SZRU) released on February 10, 2026. The intelligence report points to a sharp slowdown in industrial growth and a record federal budget deficit as key indicators of this downturn, suggesting a potential fundamental revision of Russia's economic model pursued since the early 2000s.

Industrial Output Stagnates, Budget Deficit Soars

A significant indicator of the crisis is the near standstill in industrial growth. While industrial output in Russia saw growth of 4–6 percent in 2023–2024, this figure dramatically fell to just 0.8 percent over the first eleven months of 2025. The manufacturing sector has been particularly affected by this slowdown. Further evidence of economic strain includes a steep decline in freight transportation by Russian Railways, reaching its lowest level in 16 years, reflecting weakening export flows and cooling domestic demand.

Financially, Russia's federal budget deficit escalated to $63 billion in 2025, surpassing the level recorded during the COVID-19 year of 2020. The deficit for January 2026 alone stood at 1.718 trillion rubles ($22.3 billion), nearly half of its full-year target, with oil and gas revenues plummeting by 50%. Despite a slowdown in spending growth, overall government expenditures remain at record levels, contributing to high inflation and prompting authorities to consider increasing the tax burden.

Broader Economic Challenges and Outlook

Beyond industrial slowdown and budget shortfalls, Ukrainian intelligence also flags early signs of a systemic banking crisis. In 2025, Russian banks' net profits reportedly fell by 8% relative to 2024, with non-performing loans reaching 11% and unsecured loans 12%. A Kremlin-aligned think tank, the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF), has also acknowledged the onset of a banking crisis, warning of a potential systemic crisis by late 2026 if problem assets continue to rise.

The International Monetary Fund (IMF) has downgraded Russia's growth forecasts to an estimated 0.6% in 2025 and 0.8% in 2026, marking the lowest annual growth rates outside of the pandemic years since sanctions over the 2014 annexation of Crimea. Analysts are increasingly drawing comparisons between the current situation and the 'delayed crisis of the late Soviet period,' where economic problems were masked by borrowing. Regional economies, particularly those in the periphery, are also experiencing significant strain due to sanctions, falling commodity prices, and reduced federal support.