Russia's Small Businesses Struggle as War Spending Hits 8% of GDP
Updated
Updated · FRANCE 24 English · Jun 30
Russia's Small Businesses Struggle as War Spending Hits 8% of GDP
2 articles · Updated · FRANCE 24 English · Jun 30
Summary
Shut shops and “for rent” signs in Mytishchi highlight mounting strain on Russian small businesses as the wartime economy slows and some owners consider closing or moving income off the books.
8% of GDP is now going to military spending, while tax hikes, stubborn inflation, a volatile ruble and weaker consumer demand are squeezing firms outside the defense sector.
Russia posted its first quarterly economic decline in three years at the start of 2026, adding to pressure from online competition and tighter alcohol-sale rules that hurt small stores and restaurants.
15-fold tax increases for some owners and the loss of simplified tax treatment are deepening the divide in what analysts describe as a two-tier economy, with defense thriving and much of the civilian sector left behind.