Economy

How resilient is Russia’s economy after four years of war?

Resilience in Russia’s 2022–25 economy is fading as war spending slows growth, entrenches inflation and amplifies structural fragilities.

In 2022-2025 the Russian economy demonstrated resilience despite the increasing costs of the war in Ukraine and the extensive economic and financial sanctions imposed on Russia by the coalition of Western countries. Fiscal accounts, though under strain, have remained under control. However, after nearly four years of war, the associated fiscal and quasi-fiscal costs have grown significantly and started to challenge macroeconomic and financial stability. Inflation has been well above the Bank of Russia’s target. The high growth rates in 2023-2024, fuelled by war-related public spending and a corporate credit boom, have decelerated in 2025 due to capacity constraints. Nevertheless, the Russian government still has the fiscal capacity to continue the war in the short term. It has some fiscal reserves, can increase domestic borrowing and may seek to raise further non-hydrocarbon taxation. 

The long-term perspectives look much worse. Structural and institutional weaknesses, such as the adverse demographic trends, the continuous dependence on hydrocarbon production and exports and the poor business and investment climate will be magnified by the costs of the war and sanctions, increasing isolation from the West and entrenching an inward-oriented development strategy.

Source : Bruegel

GLOBAL BUSINESS AND FINANCE MAGAZINE

Recent Posts

The Danes, the Dutch, the Swedes and the feasibility of walking away from pay-as-you-go pensions

Prefunded pensions in Denmark, the Netherlands and Sweden pair income security with fiscal sustainability, but…

3 days ago

Worker-managed firms can curb inequality and protect free markets

Rising income inequality in Western high-income countries threatens democratic governance and social cohesion, and AI…

3 days ago

Not all geopolitical shocks are inflationary

Geopolitical tensions are often seen as a source of inflation. But this is only part…

3 days ago

Cultural norms matter for macroeconomic development

Interest in the role of cultural norms, institutions, and development has resurfaced in recent years…

3 days ago

The adjustment of the Danish labour market to AI has begun

Policymakers are asking whether generative AI is reshaping labour demand, and the literature has found…

3 days ago

Women entrepreneurs could benefit from better targeting, without changing the program content

Every year, governments and development organizations spend billions on business upgrading programs — training, mentorship,…

3 days ago