What You Need to Know
• Vladimir Putin’s government has prioritized support for small and medium-sized businesses amid ongoing wartime challenges.
• In the first quarter of 2026, 209,000 small and medium-sized companies in Russia closed, a 9% increase from 2025.
• The Russian economy faces high inflation and a budget deficit, with oil and gas revenues down 23% compared to last year.
Vladimir Putin, President of Russia, has emphasized the importance of supporting small and medium-sized businesses, even during wartime, as a means of bolstering resilience against Western sanctions. However, the Russian state has struggled to protect these businesses from the adverse effects of the ongoing conflict, with significant challenges emerging in 2026. A rise in the Value Added Tax from 20% to 22% in January, along with the elimination of certain tax breaks, has compounded difficulties. Business intelligence platform Kontur.Fokus reported that 209,000 small and medium-sized enterprises closed in the first quarter of 2026, marking a 9% increase from the same period in 2025. Additionally, widespread internet shutdowns and a fuel crisis exacerbated by Ukrainian strikes have further strained the sector, leading to substantial financial losses for Moscow businesses.
Why It Matters
The situation for small and medium-sized businesses in Russia is critical as the country continues to face the economic repercussions of the war in Ukraine. With inflation rising and oil and gas revenues significantly declining, the Russian economy is under pressure. The closure of over 200,000 businesses in just three months highlights the severe impact of government policy changes and external conflicts. The challenges faced by these enterprises could hinder overall economic growth and stability in Russia, which has relied on its financial reserves accumulated during peacetime.
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