War's Economic Toll: Russian Small Businesses Struggle Under Tax Burden and Inflation

(CNA, Mytishchi, Russia, June 30) -- The ongoing Russia-Ukraine war, while benefiting the military-industrial complex, has pushed many small businesses to the brink due to increased taxes, persistent inflation, and weak consumer demand. In the suburbs of Moscow, shuttered storefronts and "For Rent" signs are a common sight.

A pharmacy owner in Mytishchi, a town northeast of Moscow, who has been in business for 12 years, criticized the government's tax hikes and intensified regulations for continuously squeezing profit margins. "My business is at its last stage. I'm considering whether to just close down."

The owner stated, "We immediately felt the pressure of inflation after Russia launched its military operation in Ukraine."

Rising prices and drastic currency fluctuations have become one of the main domestic economic consequences of Moscow's four-year offensive against Ukraine. An unprecedented series of Western sanctions has further exacerbated the situation.

In the early stages of the Russia-Ukraine war, the government's monthly military spending of billions of dollars temporarily offset some of the war's impact. Military expenditure has now increased to about 8% of the Gross Domestic Product (GDP), a post-Cold War high, but the civilian economy is gradually being crowded out.

In early 2026, Russia experienced its first quarterly economic contraction in three years.

Alexander Kolyandr, a Russian economic expert based in London, said, "Russia has now become a 'two-track economy.' The government-led defense industry is developing quite well, but almost all other industries are facing difficulties."

Kolyandr pointed out that professionals and small and medium-sized business owners not related to the military-industrial complex are now bearing the greatest pressure. "Their situation is the most difficult." (Compiled by Shi Shi) 1150630

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