Russian business leaders are increasingly less concerned about Western sanctions but more preoccupied with structural economic challenges, particularly labour shortages and cost pressures, according to the latest "CEO Barometer" poll from consultancy Yakov & Partners (formerly McKinsey).

The study was based on a survey of 150 top managers across multiple industries and released during St Petersburg International Economic Forum (SPIEF), Russia’s premier investment forum.

For the first time sanctions have fallen off the top of the list of Russian businessmen’s biggest headache. The most cited risks to corporate performance in 2025 are the chronic labour shortage and the persistent lack of qualified personnel, according to half (48%) of the respondents. Although this marks an improvement from 60% in 2024, it still tops the list of concerns, followed closely by the high cost of capital driven by Russia’s elevated key interest rate (42%) and tightening regulatory oversight.

“For the first time since 2022, sanctions have dropped out of the top three problems,” The Bell noted in its commentary on the findings. Just 20% of executives now consider sanctions a primary business risk, down from 42% in 2024 and 63% at the start of the full-scale war in Ukraine. Geopolitical tensions rank fifth, named by 15% of respondents, a steep fall from second place (56%) in 2022.        

As bne IntelliNews has reported, the Western sanctions regime has largely failed to put pressure on Russia’s economy; oil sanctions are a spent cannon and the technology sanctions have also failed to block the flow of advanced tech into Russia. The EU recently imposed the seventeenth sanctions package and is preparing an eighteenth, but Russian business has proved to be adept at finding work-arounds.

The main problem Russian businesses face today are the problems related to the persistently high inflation rates. The Central Bank of Russia (CBR) has introduced non-monetary policies to artificially cool the economy in an effort to bring down inflation, which is working. However, in the closely watched macroeconomic panel at SPIEF the leaders of the macro team debated if the cooling had been overdone and asked whether Russia’s economy is now cooling or in recession. Opinion is divided, with some calling for a switch in priorities and a cutting of rates to promote growth, whereas CBR Governor Elvia Nabiullina is sticking to her guns for now and will only cut rates when she feels inflation has fallen sufficiently far. Inflation has already dropped from over 10% last year to 9.6% in June and the budget has pencilled in 7.6% for the full year, but that forecast is likely to be cut soon, says Economics Minister Maxim Reshetnikov.

After more than three years of war, most businesses have already found solutions to the problems created by sanctions, the survey found, and have simply become part of the operating environment.

“The ‘CEO Barometer’ confirms that sanctions have become part of the objective reality, and not force majeure,” The Bell observed.

At the same time, optimism appears to be softening as the military Keynesianism inspired boost in growth in 2023 and 2024 is now clearly wearing off. After growing by 4.3% for the last two years, Russia's economy contracted in the first quarter of this year in real terms, although it put in a nominal 1.4% of growth. The CBR forecast for growth is somewhere between 0.5% and 1.5%, according to its latest macroeconomic survey.

While two thirds (66%) of executives reported an improvement in business performance over the past six months, that figure is down sharply from 84% last year. A third of companies reported a deterioration in conditions, with mining and heavy industry among the hardest hit. Transport, logistics, oil and gas, chemicals and energy also scored below average.

Still, confidence in the near-term outlook remains high. A record 58% of respondents expect business conditions to improve in the next six months, up from 48% in December 2022. A total of 90% believe the situation will either improve or remain stable.

Executives’ top strategic priority has shifted. “Cost reduction has sharply climbed to first place from seventh last year,” the study noted. Attracting and retaining staff, which was the top concern in 2024, is now second, while output growth has fallen to third place.

These shifts reveal the emerging contours of a wartime economy no longer dominated by external constraints but by internal limitations, says The Bell. “Other problems generated and aggravated by the war have come to the fore – the narrowness of the labour market, increased costs, and generally long-term structural imbalances in a deformed economy,” The Bell concluded.

One executive put it bluntly: “If Westerners return to the market now or the Chinese come, we will not survive.”