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The Russian forestry industry is facing a shrinkage of 20-30 percent by 2026, warns Deputy Minister of Industry and Trade Mikhail Yurin. He cites a combination of sanctions, high interest rates, and the strong ruble as the causes. According to Yurin, the downward trend is likely to continue into 2027 if geopolitical tensions further escalate.
"Wood processing is one of the weakest industrial sectors in Russia, with consistently declining production," reports the Ministry of Economic Development. In the third quarter, production fell by 4.3 percent, while in October, a decline of 7.8 percent was recorded. These figures underscore Yurin’s concerns about the future of the sector.
Yurin attributes the problems to multiple factors: "high policy interest rates from the central bank, stricter sanctions, a strong ruble, and reduced access to export markets due to secondary and tertiary restrictions." The consequences are evident in Russian timber exports, which have fallen by more than 20 percent since before the war, from 12.5 billion dollars in 2021 to 9.8 billion dollars. At the same time, logging volumes are expected to reach a four-year low of 182 million cubic meters this year.
Financial difficulties are leading to a growing number of bankruptcy filings and production interruptions. In September, the federal tax service initiated bankruptcy proceedings against Tobol, the largest forestry company in the Tyumen region. Additionally, Svyezha-Tyumen, part of billionaire Alexei Mordashov’s Sveza group, halted its operations and laid off 323 employees. The parent company cited "a sharp decline in production volumes and capacity utilization" as the reason for the financial losses.
