The White House is seeking to revive peace talks this weekend with Ukrainian President Volodymyr Zelensky due to meet President Donald Trump in Florida on Sunday. Russian forces stepped up their bombardment of Ukraine ahead of the meeting, but prolonged fighting presents risks for the economy.

“A banking crisis is possible,” a Russian official told the Washington Post recently on condition of anonymity. “A nonpayments crisis is possible. I don’t want to think about a continuation of the war or an escalation.”

Russia’s economy was surprisingly resilient in the face of severe Western sanctions after President Vladimir Putin launched his invasion of Ukraine in early 2022. That’s as China and India were eager to snap up cheap Russian oil, keeping the Kremlin’s coffers full and providing revenue for its military.

But more recently, energy prices have slumped while Europe and the U.S. have tightened sanctions. Oil and gas revenue has tumbled 22% in the first 11 months of the year, and Reuters estimated that December proceeds are on pace to sink nearly 50%.

To cover the shortfall in energy revenue, Moscow has tapped its sovereign wealth fund. But that is running out now too, so the government has resorted to raising more revenue via tax hikes.

Meanwhile, a tight labor market and high inflation have forced the central bank to keep interest rates high, and recent easing has failed to prevent spending declines in several consumer categories.

With companies feeling the squeeze of high rates and weaker consumption, Russian data show unpaid wages nearly tripled in October from a year ago to more than $27 million, with the Post adding that furloughs and shorter workweeks are also becoming more common.

As a result, more consumers are having trouble servicing their loans. Given the headwinds, the Russian official warning of a banking or nonpayment crisis isn’t the first of its kind.

In June, Russian banks raised red flags on a potential debt crisis as high interest rates weigh on borrowers’ ability to service loans. Also that month, the head of the Russian Union of Industrialists and Entrepreneurs warned many companies were in “a pre-default situation.”

And in September, Sberbank CEO German Gref, one of Russia’s top banking chiefs, said the economy was in “technical stagnation,” following his warnings in July and August that growth was close to zero.

The Center for Macroeconomic Analysis and Short-Term Forecasting, a state-backed Russian think tank, said this month the country could face a banking crisis by next October if loan troubles worsen and depositors pull out their funds, according to the Post.

“The situation in the Russian economy has deteriorated markedly,” wrote Dmitry Belousov, head of the think tank, in a note seen by the Financial Times. “The economy has entered the brink of stagflation for the first time since early 2023.”