Lower Profits, Expensive Loans: Russian Companies Are Investing Less

Russia's capital expenditures fell by 9.9% in real terms in the first half of the year compared with the same period last year, according to the Russian statistics agency Rosstat. For the full year, the Russian Ministry of Economic Development expects a decline of 5.4%. In May, it had still anticipated a decline of 1.5%. The reasons: First, major projects are coming to an end. Second, companies are earning less. Third, loans remain expensive.

From January through June, companies and the government invested 16.2 trillion rubles, equivalent to approximately 180 billion euros. In the first quarter, the real decline was 14.3%, and in the second quarter, it was 6.6%. According to a Rosstat estimate, investment had already fallen by 2.3% last year, following an 8.4% increase in 2024.

Government Does Not Expect Growth to Resume Until 2028

The Ministry of Economic Development stated in late September that the correction in investment had turned out to be “longer and deeper” than planned. It cited general uncertainty, risks to infrastructure, and the central bank’s higher key interest rate forecast as reasons. For 2027, the ministry now expects growth of only 0.2% instead of the previously projected 2%. In 2028 and 2029, investment is expected to grow by 2.5% and 3%, respectively. The expected recovery thus merely offsets the slump: If the annual figures are added together, investment in 2029 will be practically at the same level as in 2025. According to the forecast, the share of gross fixed capital formation in GDP will rise only slightly: from 23.3% in 2025 to 23.4% in 2029.

Other forecasters see the current year in a similar or milder light, but the following years vary widely. The Moscow Center for Macroeconomic Analysis and Short-Term Forecasting (ZMAKP) expects a decline of 4.8% to 5.2% for 2026. The Russian Central Bank is more optimistic. Its forecast from October 23 projects gross fixed capital formation this year to range from minus 1% to 0%, and next year from plus 1% to 3%. The World Bank, on the other hand, expects further declines: by 1% this year, by 2% in 2027, and by 1.9% in 2028.

Major projects are winding down, and profits are falling

The Bofit research institute of the Bank of Finland attributes part of the decline to the boom of previous years. From 2021 to 2024, investment rose by an average of about 8% per year. Growth was particularly rapid in sectors related to military production. In addition, major projects in the oil and gas industry, the chemical sector, and logistics drove growth. Many of these projects have been completed or are well underway.

Added to this is weaker corporate financial performance. Large and medium-sized companies—excluding banks and insurers—earned significantly less from January through July. According to Rosstat, their net financial result—that is, profits minus losses—fell by 15.7% to 13 trillion rubles (145 billion euros). One-third of these companies reported losses: 33.4%, up from 30.6% in the same period last year. Loans remain expensive. According to Bofit, corporate loans with a term of more than one year cost around 13% in July. On October 23, the Central Bank left its key interest rate at 14%.

Surveys confirm this caution. In the first three quarters, industrial firms were more dissatisfied with the level of their investments than at any time since 2010. This is reported by the Moscow business newspaper Kommersant, citing surveys by the Institute for Economic Forecasting at the Russian Academy of Sciences. Only 31% of companies consider access to credit to be normal. This is the worst figure since the 2008–2009 financial crisis.

Investment Slowdown Will Hinder Growth

“Following a 5.4% decline in 2026, the recovery over the next three years will bring investment back only to roughly the 2025 level. This limits the potential for a rapid acceleration in GDP growth. Less investment today means less new capacity tomorrow, which is why the consequences of the investment lull will persist even after credit becomes cheaper,” writes Vladimir Chernov in a commentary for the Moscow-based investment firm Finam. Chernov is an analyst at the brokerage Freedom Finance Global, headquartered in the Kazakh capital of Astana. He considers the government’s target of 2.4% growth in 2029 to be “more of an optimistic scenario.”

Foreign companies are contributing almost nothing to investment in Russia. According to the Finnish firm Bofit, their share stood at 0.1% in the first half of the year.

Source: Bofit, World Bank (both EN); Rosstat 1, 2, Kommersant 1, 2, Russian Central Bank, Finam (all RU)

Source: German-Russian Chamber of Foreign Trade, “Lower Profits, Expensive Loans: Russian Companies Are Investing Less,” October 29, 2026.

This article was prepared for the German-Russian Chamber of Foreign Trade.