Putin adviser warns of economic crash after major firm cuts jobs by 50%

A Russian defence executive has warned the country's economy is facing a 1990s-style meltdown. After the collapse of the Soviet Union in December 1991, the Russian government introduced a shock therapy economic programme as the country transitioned to capitalism.

The consequences for ordinary Russians were catastrophic, as the economy contracted by nearly 50% between 1991-97 and hyperinflation wiped out bank savings. Ordinary people struggled to put food on the table, as grocery prices skyrocketed and wages remained stagnant. Vladimir Putin has skilfully mined memories of the painful transition years to boost support for his domestic and foreign policies.

However, the Russian economy is once under immense strain due to the demands placed on it by the ongoing war in Ukraine and the impact of sanctions.

The Russian President now faces his own economic crisis, that could be severe as the one Russians lived through in the 1990s.

Alexey Chadayev is a former adviser to Russia's parliament and an executive at a defence firm.

In an interview with a Russian military blogger, he warned that Russia faced a rerun of the early Yeltsin years.

"The real sector of the economy, again with the exception of those working in defence industry in one form or another, is in a very bleak situation because money has become expensive," he explained.

"Devaluation is rising, costs are rising, and there is no access to affordable credit. Everyone is facing cash flow gaps, and we are seeing the return of barter deals, just like in the forgotten days of the 1990s."

However, even defence firms appear to be feeling the heat, with some poised to make big redundancies.

Russia's largest manufacturer of railway cars and the main supplier of tanks to the army is launching a major wave of staff cuts, according to local media.

Uralvagonzavod plans to lay off 10% of workforce by February 2026 and will also stop hiring new employees.

For some divisions, the scale of layoffs will amount to "up to 50% of their full-time staff."