Alexandra Prokopenko
Since the full-scale invasion of Ukraine, the Russian economy has repeatedly defied expectations. Predictions of a double-digit contraction never materialized. On the contrary, GDP grew by 3.6 percent in 2023 and an expected 4 percent in 2024: rates that both developed and developing nations might envy. Key indicators like GDP growth, household income, and low unemployment have become President Vladimir Putin’s trump cards. He brandishes them to the West as proof that sanctions are ineffective, and presents them to partners in Asia and Africa as evidence of Russia’s sound economic policies and the resilience of its development model. Chinese officials are apparently convinced, having reportedly established an interagency commission to study Russia’s economic model.
Yet this image of resilience is deceptive. Over the past two years, Russia’s economy has operated like a marathoner on fiscal steroids—and now those steroids are wearing off. Growth is slowing, key sectors are cooling, and the arguments underpinning Putin’s claims of economic “invulnerability” are unraveling. The Kremlin faces the mounting challenge of sustaining the war effort and funding social and infrastructure programs. Simultaneously maintaining low inflation and a stable ruble is proving increasingly unsustainable. Without significant course corrections, the current momentum may falter within a year. By 2026–2027, the fiscal and social challenges now on the horizon could fully metastasize into a crisis.
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