Military production in Russia has shifted from three years of growth to stagnation. In September 2025, metal goods output fell by 1.6% year-on-year, while tank and IFV production slowed from 61% to 6%. The key reason is stress on the state budget: export revenues dropped by 21%, and the deficit is five times higher than expected. Alfa-Bank believes this may signal the beginning of cuts in government spending and a further “cooling” of the Russian economy.
Russia’s 2026 budget has passed its first reading as a “social-defense” plan with a moderate deficit of 1.6% of GDP (3.8 trillion rubles). Revenues are projected at 40.3 trillion rubles (+8.6% compared to the previous year), and expenditures at 44.1 trillion rubles (+3%). The largest budget item is “national defense” (12.9 trillion rubles, or 29% of total spending), with another 3.9 trillion earmarked for security and law enforcement. Most funding will come from domestic borrowing (4 trillion rubles) and partly from the National Wealth Fund. The increase in military spending comes amid a slowing economy and the end of active fiscal stimulus.
The New York Times has revealed that Vietnam struck a secret $8 billion arms deal with Russia in defiance of international sanctions. According to a leaked hack of Rostec documents, Vietnam plans to purchase 40 fighter jets and 9 electronic warfare systems for the Su-35, as well as 26 ground-based radar-jamming systems designed to disrupt radar-guided missiles. Payments are being routed through intermediaries, causing delays. Deliveries are expected in 2025.
