Russia economy meltdown as towns left abandoned and industries collapsing

Russia is at risk of seeing 130 of its small towns dying amid collapsing industries, "poor" infrastructure and lack of investment, a Ukrainian former central banker has claimed. Kyrylo Shevchenko, who regularly comments on Russia's economy, said the towns are home to 3.4 million people, some of whom he claimed are being relocated to occupied parts of Ukraine.

In a post on social media, Mr Shevchenko wrote: "Russia risks losing 130 small towns, home to 3.4M people. In a decade, they've lost 314K residents amid collapsing industries, poor infrastructure and no investment. The state's response: $50M (£37.2m) and 'voluntary resettlement'.

"I've also read Russia is relocating people from remote regions to occupied parts of Ukraine. Important to keep in mind".

In another tweet posted on Monday (August 11), Mr Shevchenko, who was of Ukraine's National Bank from July 2020 until October 2022, claimed 141,000 firms have "vanished" in Russia in just six months, outpacing new registrations for the first time since 2022.

Mr Shevchenko was responding to a study commissioned by the Kremlin carried out by the Russian Presidential Academy of National Economy and Public Administration(RANEPA).

It estimates that 129 small towns with a total population of 3.4 million people are at risk of disappearing.

Lack of jobs is one of the main reasons for falling populations in those areas as well as provincial towns being hit particularly hard by conscription drives for Russia's war in Ukraine.

In July, a minister in Russia's energy department warned over a quarter of coal companies in Russia were at risk of closing amid a crisis in the industry, in part due to debt levelsx, weak demand and low prices, according to The Moscow Times.

News of RANEPA's report came in the same week US President Donald Trump's administration took steps towards punishing countries which buy Russian oil.

Washington had set last Friday as a deadline for Moscow to make more progress towards a peace deal with Kyiv or face the imposition of tariffs on countries which buy oil from Russia.

India was last week subjected to an additional 25% tariff for importing Russian oil. China, which is the biggest importer of oil from Russia, has not received the same treatment.

Nevertheless, such tariffs could further weaken the Russian economy, which is dominated by fossil fuels.

Mr Trump raised the prospect of normalised trade relations between the US and Russia on Monday (August 11) ahead of a planned meeting between the US leader and Russian President Vladimir Putin on Friday.