Russia’s Economic Crisis Deepens as Corporate Debt Surpasses $446 Billion

The perception of Russia’s economic resilience in the face of Western sanctions is beginning to falter, raising doubts about Moscow’s supposed advantage in its war against Ukraine. A Bloomberg Opinion piece by Marc Champion challenges the Kremlin’s narrative, suggesting that many of Russia’s perceived strengths are either overestimated or unsustainable.

Champion argues that President Vladimir Putin’s position is weaker than he portrays. Several of Russia’s supposed advantages depend on Western responses, Ukraine’s improving military capabilities, or sheer deception. One of the most notable examples is Putin’s nuclear threats, which he uses as a strategic bluff to project strength.

Table: Key Economic Indicators

Indicator	Value	Source
Corporate debt increase since 2022	36.6 trillion rubles ($446 billion)	CMASF Report
Corporate debt growth percentage	Over 70%	Harvard University Analysis
Economic stagnation onset	Mid 2023	CMASF Report

A January report by the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF) indicates that Russia’s non-defense economy has stagnated since mid-2023. Additionally, a credit crisis is emerging within the country’s defense sector. Former US banker Craig Kennedy, now at Harvard University, estimates that Russia’s corporate debt load has surged by over 70% since 2022, reaching 36.6 trillion rubles ($446 billion at historical rates).

The situation is particularly concerning within the banking sector, where financial institutions quietly restructure bad debt to evade reporting obligations. Defense contractors continue operations under the assumption that the Russian state will bail them out if necessary. However, Champion warns that this assumption holds only as long as the Kremlin can sustain financial support.

Champion further cautions against Western actions that could inadvertently bolster Putin’s position in future negotiations. He stresses that the worst mistake the United States and Europe could make would be to strengthen Putin’s hand through premature trade concessions or economic policies that relieve pressure on the Russian economy. While both Putin and Ukrainian President Volodymyr Zelenskyy have expressed openness to peace talks, any ceasefire discussions must be approached with caution, given past instances where Russia used truces as a means to regroup and prepare for further aggression.