One in Four Russian Construction Firms Face Bankruptcy as War Drains Economy
Russia’s once-thriving construction sector is teetering on the edge of collapse. According to a report published this week, 25% of all Russian construction companies are now at risk of bankruptcy, revealing the stark consequences of President Putin’s choice to wage total war over economic stability.
The industry—long considered a cornerstone of domestic growth and a barometer of consumer confidence—has been gutted by a toxic mix of sanctions, inflation, credit scarcity, and a collapsing private sector. In 2021, construction accounted for roughly 6% of Russia’s GDP. Today, that contribution is plummeting as major residential and commercial projects are cancelled, shelved, or abandoned mid-build.
The problem is structural and systemic. War demands steel and concrete not for homes and schools, but for trenches, prisons, and weapons factories.
While military spending surges, civilian infrastructure has become a neglected afterthought.
Even state-flagged megaprojects, like the much-vaunted “Sputnik” housing development programme, are reportedly stalling due to budget shortages, contractor withdrawals, and ballooning material costs.
According to analysts at Russia’s Institute for the Development of Construction, thousands of firms are unable to service their loans, with banks increasingly reluctant to refinance amid fears of default. The sector is further crippled by a brain drain of skilled engineers and tradespeople, many of whom have fled the country or been conscripted into the war effort.
Private demand has also cratered. Real incomes are falling, mortgages are harder to obtain, and households are understandably reluctant to invest in long-term housing while missiles are falling across the border and conscription looms.
Behind the numbers is a broader unraveling of the post-Soviet Russian economy. Since the invasion of Ukraine in 2022, Western sanctions have choked access to foreign capital, technology, and materials.
Moscow claims “import substitution” will offset the damage. But the on-the-ground reality tells a different story: shortages, substandard substitutes, and an unrelenting rise in production costs.
In the face of these pressures, major construction players are retreating. Firms like PIK Group and Etalon, once darlings of the Moscow Exchange, have slashed output and posted alarming losses. Small and regional developers fare even worse, often lacking political patronage or state contracts to cushion their fall.
This decay is not confined to bricks and mortar. It is symptomatic of a deeper national rot. The war has devoured the Russian budget, forced spending cuts in education and health, and shrunk every pillar of peacetime prosperity. The construction industry, always labour-intensive and capital-hungry, has become one of its most visible victims.
As the Kremlin continues to pour billions into drones, missiles, and battlefield salaries, the physical and economic infrastructure of Russia is collapsing in slow motion. Apartment blocks stand half-finished. Workers go unpaid. Urban renewal plans gather dust.
Putin’s war is not only erasing towns in Ukraine—it is quietly dismantling the economic foundations of Russia itself. The scaffolding is still there, but what it held up is gone.
