Kremlin hides war's economic impact, says ISW
Photo: The Kremlin is trying to hide the negative impact of the war in Ukraine on the Russian economy (Getty Images)
The Kremlin is running a special campaign to hide the war's impact on the economy. Specifically, false information is being spread about the country's inflation rate under the leadership of Vladimir Putin, according to the Institute for the Study of War (ISW).
"The Kremlin continues to conduct an information campaign likely directed toward both domestic and international audiences that aims to conceal the extent to which Russia's protracted war against Ukraine has negatively affected Russia's economy," the report states.
According to analysts, on February 7, Russian Prime Minister Mikhail Mishustin met with Kremlin leader Vladimir Putin to discuss the state of the Russian economy. Mishustin claimed that Russia's Gross Domestic Product (GDP) grew by 4.1% in 2024, largely due to "intensive" growth in the country's manufacturing sector – likely referring to the expansion of Russia's defense industry since the start of its full-scale invasion of Ukraine in February 2022.
He also stated that inflation in Russia allegedly reached 9.52% in 2024, while Putin claimed that inflation stood at 9.9% as of February 3, 2025.
" Russia's true inflation is quite higher than the official statistics the Kremlin is willing to publicize, however. Several studies indicate that Russia’s inflation rate is closer to 20 percent," ISW notes, adding that "Mishustin and Putin also attempted to posture Russia's economy as stable in the face of international economic pressure."
Analysts emphasize that Mishustin and Putin did not mention the Russian Central Bank's interest rate hike to 21% in October 2024 or how Russia has been drawing from its National Wealth Fund to finance its military operations over the past three years.
"The liquidity portion of Russia’s National Welfare fund may run out by Fall 2025," ISW concludes.
State of Russia's economy due to the war with Ukraine
Back in November of the previous year, analysts at the Institute for the Study of War predicted that Russia would face serious problems in the near future. Its economy proved to be less resilient than the government claims.
In particular, due to sanctions and other factors, the Kremlin faces economic constraints, which will likely hinder its efforts to impose policies to combat the long-term demographic decline in Russia.
For more on how the war is undermining Russia's economy, the problems that can no longer be ignored, and whether Russia has any remaining resilience, read the full article on RBC-Ukraine.
