Russia cut its growth forecast for the year from 1.3% to 0.4%, further signs of the country’s faltering war economy. Businesses are increasingly struggling to pay their debts, Fortune reported, with growing defaults threatening a quarter of the bond market.

Punishingly high borrowing costs have damaged manufacturing and business investment but failed to slow inflation, driven by huge military spending and a shortage of labor caused by military recruitment.

Moscow’s energy revenues are down 40% year-on-year despite the Iran war pushing up oil prices, partly because Ukrainian drone attacks have crippled Russian refinery capacity.