The Russian Economy Is Entering A Systemic Crisis

Is Koscheyev's needle far away?

Perhaps the most telling news story of August was the following:

VEB’s chief economist predicted Russia’s defeat in a “war of attrition” and an inevitable social crisis due to new sanctions and attacks by the Ukrainian Armed Forces.

VEB fired its chief economist Andrey Klepach following his remarks about Russia’s defeat in an economic “war of attrition.”

It is precisely through this lens that we must view all these unsubstantiated claims by Rosstat about GDP growth in the second quarter or deflation in August and other economic “successes” that do not exist in the real world.

In the real world, however, there is a unique real-life experiment: how to wipe out the leader of an entire key industry in a month, along with a study of how this will affect the entire economy. And then there’s fuel crisis No. 2. Plus a bit of panic on the stock market and a lot of panic among the general public, with a mass withdrawal of cash from banks. There are farmers willing to sell wheat below cost because no one is buying it, but they’re not ready to plant for the new harvest. There are developers who can’t sell more than half of the housing they’ve built. And plenty of other evidence of the successful transformation of the aggressor country’s economy.

That’s what we’ll be discussing in today’s review.

Wildberries Bingo

Despite the abundance of events in August, let’s start with Wildberries Bingo after all. But let’s take a step back. Remember that famous fairy tale: on an island stands an oak tree; hanging from that oak is a chest; inside the chest is a hare; inside the hare is a duck; inside the duck is an egg; and inside the egg is a needle, on the tip of which lies the death of Koschey the Deathless.

So, let’s take a look at the Russian economy, using this simple folk tale as an analogy.

The specific nature of the structure of the modern economy—if we look at its primary indicator, GDP—is that more than two-thirds of it consists of consumption. In Russia, final consumption expenditure exceeds 70% of GDP. At the same time, consumer demand accounts for a solid 53–54% of GDP.

In other words, as paradoxical as it may sound, for many, amid all this talk of an oil-and-gas giant, a military economy, and so on, it is consumption—the largest part of the economy (nearly 100 trillion rubles a year)—that is the real backbone.

Therefore, if you want to inflict real damage on the Russian economy, there is simply no better target for your efforts than the consumer sector—purely from a mathematical standpoint.

One of the relics of the Russian economy’s past has been its high level of digitalization (yes, it’s hard to believe given the current digital “concentration camp” and the 40% drop in fiber-optic cable production). Here’s a bit of a shocker: e-commerce accounts for a higher share of total retail sales in Russia than in the U.S. (!).


Overall, a good quarter of retail trade in Russia uses e-commerce as a sales channel. And here we come to the most interesting part. Russia’s e-commerce market is primarily made up of marketplaces. And the marketplace sector is effectively made up of two companies: Wildberries and Ozon (and a bit of “Yandex Market”).

Wildberries controls over 50% of the market, while Ozon holds about 45%.

To put it in monetary terms: Wildberries accounts for over 6 trillion rubles in revenue. In other words, taking down Wildberries would mean eliminating a good half of the marketplace sector and dealing a serious blow to a key pillar of the Russian economy.

The question is: how? After all, Wildberries consists of tens of thousands of trucks, hundreds of thousands of sellers, and tens of thousands of pickup locations. It’s like a hydra with a million heads. But there’s one “but.” The heart and backbone of the business, its bottleneck, its Achilles’ heel—are the warehouses.

To put it in perspective: the total area of Wildberries’ warehouses exceeds 5 million square meters, but the top 10 warehouses account for nearly a third of that space. In other words, take away ten warehouses, and Wildberries becomes a sort of “Titanic” after colliding with an iceberg.

So here’s the thing. Some mysterious benevolent drones wiped out 8 of the 10 largest warehouses in a month—or 13 of the top 20, or 18 of the top 30. According to estimates, 1.2 million square meters of Wildberries’ warehouse space—or more than 20% of its total inventory—has been eliminated. If we look at the European part of the business, there are essentially no operational warehouses left among the top 10.

And then a chain reaction sets in. Wildberries has more than 90,000 (!) order pickup points (OPPs). Since the goods were destroyed in the warehouses, there’s nothing to hand out. With nothing to deliver, the ODPs can be closed, since their revenue comes from sales (no sales—no revenue). There are about 500,000–550,000 seller accounts registered on Wildberries. This means that roughly a hundred thousand business owners now simply have nothing to sell.

And if we consider that these hundreds of thousands of PFC owners and sellers took out bank loans they won’t be able to repay—since, as we’ve noted, everything burned down—we’re looking at yet another looming problem for the economy. Incidentally, Wildberries’ own debt stands at 1.3 trillion rubles. In other words, the scale of the problem is such that it’s not just VTB (Wildberries’ main creditor) that needs to brace itself, but the entire banking system. Incidentally, it’s an interesting coincidence—it was precisely in August that VTB’s stock fell to a new all-time low.

And yet the budget had counted on receiving taxes from all these sales and profits. Now, obviously, it won’t. To put this in perspective, we’re talking about trillions of rubles: from 5 trillion in turnover, hundreds of billions in VAT could have been collected—or not. From hundreds of billions in profits, tens of billions in income tax could have been collected—or not. And we could go on like this for quite a while, because the hundreds of thousands of businesspeople who made their living off the Wildberries ecosystem also paid taxes, consumed goods, and paid taxes again—but now that’s no longer a given.

All in all, it amounts to a rather interesting chain reaction.

Let’s sum things up. The market leader among marketplaces, with a turnover exceeding 6 trillion rubles and a profit of nearly 180 billion rubles, is literally vanishing before our very eyes, triggering a whole chain of consequences whose scale, no matter how you look at it, is measured not even in hundreds of billions, but in trillions of rubles. And this is the result of just one month of systematic work. Another month—and Ozon will shrink significantly (efforts to bring it into compliance have already begun—three warehouses with a total area of over 300,000 square meters burned down during operations along with the goods; Ozon’s market capitalization lost a good third of its value in just a couple of weeks in August), and with it, the marketplace sector as a whole. And let’s not forget that it was a behemoth worth 13–15 trillion rubles.

Returning to the fairy-tale analogy. Wildberries is the tip of the needle. The needle is the marketplace sector. The egg is e-commerce. The duck is retail trade. The hare is GDP. Well, the chest represents the Russian Federation’s economic system as a whole.

However, there is a view that, in reality, the tip of the needle is oil refining. And if you look at the “Hunger Games” unfolding at gas stations across the vast country and listen to farmers and industrialists whining about how efficiently things run without fuel, you can’t help but talk at least a little about the Fuel Crisis 2.0.

Fuel Crisis 2.0

The shortage of all types of fuel at gas stations in June–July 2026 was largely triggered by panic and, in essence, was analogous to the legendary rush for sugar, buckwheat, or eggs—the kind that has been occurring periodically in Russia lately but quickly fizzles out. The nature of such crises is generally understandable: at the time, mentally unstable citizens decided they needed to buy up all the gasoline they could find, because “what if it disappears?” This, of course, leads to a temporary shortage that disappears fairly quickly. But over time, as all the panickers have filled their tanks, canisters, and barrels in the garage, the lines naturally dissipate.

The August 2026 crisis scenario is an event of a different order. This is a real physical shortage that can be resolved either by a sharp increase in supply or by an equally sharp drop in consumption.

The supply situation is looking very bleak. Even Rosstat, gritting its teeth, was forced to admit that 20% of oil refining capacity has vanished somewhere.

The ban on gasoline and diesel exports did not help. Therefore, they tried to eliminate the shortage through imports. But it turned out that Belarus is physically unable to fill the entire gap, and other countries are not eager to help or actively share a resource that is currently in short supply. Plus, some interesting details have since come to light. It turns out that the imported gasoline is unexpectedly twice as expensive. As a result, a tanker from India arrived but remained unloaded for a long time, since it was unclear what kind of fool would pay double the price.

Meanwhile, the refineries continue to burn—in other words, the problem “won’t resolve itself.” Especially since August saw yet another record for the number of drones: more than 1,300 long-range drones over two consecutive days. In other words, any refinery within range that decides to resume operations is guaranteed to get hit by a dozen drones and will once again stop producing whatever it was making.

But drone activity wasn’t limited to Wildberries warehouses or oil refineries. The Port of Novorossiysk opened a new chapter in the Russian economy’s suffering.

Farmers asked to pass on

Few people know this, but Russia was the world’s leading wheat exporter. Even fewer people know that more than half of Russia’s wheat exports were shipped through the Port of Novorossiysk.

So, one fine day in August 2026, Novorossiysk’s two largest grain terminals simultaneously suspended operations. These were the NZT (Novorossiysk Grain Terminal) and the NKHP (Novorossiysk Bread Products Plant), with annual capacities of 8.5 and 7.1 million metric tons, respectively. In other words, half of Russia’s wheat exports went down the drain. Add to this the naval blockade of the Azov and Black Seas, and the picture becomes quite bleak for Russian farmers.

Given this situation, there will be no export revenue (in 2025, Russia earned over $15 billion from this activity), and farmers have nowhere to sell their grain—it isn’t being bought even below cost. In other words, on the eve of planting season, farmers faced a dilemma—to plant or not to plant. After all, it turns out there’s no point in planting; on top of that, there’s no diesel fuel, and no money for planting expenses.

A pleasant bonus from the naval blockade was Turkey’s suspension of Russian oil purchases via the Black Sea.

And what do you think? Russian oil exports have experienced their sharpest decline since the start of the full-scale invasion. And here’s another surprising fact: production in Russia has been falling for eight months in a row and has dropped to its lowest levels in the past six years.

Instead of a summary

The Russian economy went through August with the feeling that things were very bad, but with the certainty that they would get much worse. Wildberries is technically still in business, but its future is extremely uncertain. Ozon is officially next in line, and September will be more than enough time for its numbers to drop to a figure close to zero as well. Hundreds of thousands of entrepreneurs are losing their businesses and sources of income, and in return are left face-to-face with debt.

Farmers are experiencing a serious existential crisis due to the loss of economic viability in their operations. And they’re not the only ones. Real estate developers, who can’t sell more than half of what they’ve built, realize that their momentum and reserves are running out, while their debts are growing, and bankruptcy is only a matter of time.

In fact, the problem isn’t limited to developers or farmers: the steel industry, the coal industry, machine building, the forestry industry—the list goes on, but it’s better to simply state one fact: for the first time in history, non-payments in the Russian economy have reached 9 trillion rubles.

Banks are looking at all this and realizing that no one will repay them the tens of trillions in loans, and that, essentially, is the end. Depositors, standing in line for gas, are also beginning to realize that in this scenario, no one will return their deposits to them, and they continue their panicked flight to cash (they’ve already withdrawn more than 2.4 trillion rubles since the start of the year).

And there’s no one to save the day. The federal budget, with a 6.5 trillion ruble shortfall, can’t even help itself. It has gotten to the point where the Ministry of Finance has stopped disclosing real-time data on the balances in the federal budget’s single account (where the budget’s “free balances” are accumulated)—which means things are that bad.

The problem with the Russian economy lies not in the presence of individual crises, but in the fact that they are beginning to merge with one another. A bleak gloom is enveloping the Russian Federation’s economic system. Entirely. In economic theory, this is called a systemic economic crisis.

Alexey Plastun, Zerkalo Nedeli

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