Russian lumber companies have lost a third of their export markets as a result of sanctions, new data shows.
Putin is facing a growing economic crisis as the country struggles to deal with the double whammy of biting sanctions and record-high interest rates.
With inflation spiralling out of control, Russia”s Central Bank was forced to hike interest rates to 21% late last year.
Bank officials have not ruled out further hikes to stem the inflationary surge.
Higher interest rates are making it increasingly difficult for companies to pay off bank loans, pushing many to the brink of bankruptcy.
Compounding the serious difficulties are Western sanctions, which have closed off important export markets for Russian companies.
The latest sector to feel the economic pain is Russia’s lumber industry.
The sector is reportedly unravelling under sanctions as companies struggle to find new markets for their product.
New figures show the industry has lost almost £5 billion in export revenues after losing a third of its markets.
Kyrylo Shevchenko, the former head of Ukraine’s National Bank, noted: “The Kremlin scrambles—tax cuts, state purchases, anything to keep it breathing.
“Profitability hovers near zero, interest rates climb, and shutdowns loom, threatening even stable sectors.
“Meanwhile, steel and coal spiral. The cost of Russia’s war in Ukraine stretches far beyond the battlefield.”
Russia ranks second in the world with 82 billion cubic meters of forest resources.
The annual value of Russia”s timber industry exceeds £25 billion, contributing about 1% to GDP, according to the website tendata.com
Meanwhile, Russia”s giant mining and smelting conglomerate Nornickel saw its profit plummet in 2024, crashing to £1.4 billion, as sanctions bite and metal prices slump.
Revenue sank 13%, forcing the company to scrap dividends and cut costs.
Western buyers are ditching Russian metals, choking payments and technology access despite dodging direct sanctions.