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Russian businesses risk wave of bankruptcies from September: business union
🇵🇾 Paraguay /Economy & Trade

Russian businesses risk wave of bankruptcies from September: business union

From ABC Color · () Spanish

Translated from Spanish, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Russian businesses face a significant risk of widespread bankruptcies starting in September due to accumulating negative economic factors, according to a business union.
  • The Russian Union of Industrialists and Entrepreneurs warned that high interest rates are hindering investment and forcing companies to take out loans solely for survival, not development.
  • The union acknowledges the Central Bank's challenges, including fuel shortages and rising federal deficit, but argues current rates are unsustainable for businesses, especially those relying on parallel imports affected by sanctions.

Russian businesses are bracing for a potential wave of bankruptcies beginning in September, warned Alexandr Shojin, president of the Russian Union of Industrialists and Entrepreneurs. He cited a severe economic downturn and the cumulative effect of negative factors as the primary drivers of this risk.

Shojin highlighted that the current benchmark interest rate, set at 14.25%, is stifling investment and crippling companies. "Companies are taking out loans only to alleviate problems, not for development," he stated, noting that recent investment growth is largely due to unplanned repairs rather than economic recovery.

Maintaining the benchmark interest rate at the current level could generate a risk of a wave of bankruptcies in the fall due to the cumulative effect of negative economic factors.

— Alexandr ShojinShojin, president of the Russian Union of Industrialists and Entrepreneurs, warned about the impending economic crisis for businesses.

The high interest rates, initially raised to 21% in October 2024 to combat inflation, are also negatively impacting Russia's parallel import system, which bypasses international sanctions imposed over the war in Ukraine. Businesses that invested heavily in previous years, even with costly loans, are now particularly vulnerable as the economy slows.

While Shojin understands the Central Bank's potential reasons for maintaining high rates, such as ongoing fuel shortages and an increasing federal deficit in 2026, he argues the current policy is unsustainable. The union's data indicates a contraction in demand while companies face significant loan repayment obligations. The Kremlin's continued prioritization of military spending amid the ongoing war in Ukraine further complicates the economic outlook.

Companies are taking out loans only to alleviate problems, not for development.

— Alexandr ShojinShojin explained how high interest rates are forcing Russian businesses into survival mode.
DistantNews Editorial

Originally published by ABC Color in Spanish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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