Kremlin’s top state bank predicts Russia could lose war of attrition
Photo: Russians in a store (Getty Images)
State-owned VEB.RF (Vnesheconombank) has stated that Russia cannot win the economic confrontation with the West as long as Western countries continue to support Ukraine. According to him, the Russian economy is facing rising costs, falling investment, and technological lag, reports The Moscow Times.
The bank's chief economist, Andrei Klepach, said during a session of the Nikitsky Club that sanctions and the Western blockade are increasing the costs of the Russian economy, and that Ukrainian strikes on ports, infrastructure, chemical plants, and oil refineries are causing ever-greater damage to Russia.
"We are losing the economic competition"
Klepach stated that Russia is losing the technological and economic competition not only to the US and China, but, in certain aspects, even to Ukraine.
He acknowledged that the Ukrainian economy has suffered significant destruction and is experiencing demographic problems. At the same time, he said, despite this, the Ukrainian economy continues to function thanks to substantial financial aid.
"We are falling behind. We are losing both the technological and economic competition in the world. Moreover, as I said, we are losing not only to China and the US — in some respects, we are losing to Ukraine," Klepach stated.
He also emphasized that expectations of a collapse of the Ukrainian economy have not materialized.
"We will not win the competition in this war of attrition. We have an illusion that everything will collapse there. It hasn't collapsed and it won't. Our costs are mounting," the economist said.
Russian economy has entered a decline
Klepach noted that after the economic growth observed in Russia in 2023–2024, the country's economy entered a decline in 2026.
According to him, investment has sharply declined, and civilian industries have fallen into recession. Among them, he cited the aviation industry, building materials production, light industry, and food processing.
An additional factor, according to Klepach, has been the tight monetary policy of the Central Bank of Russia. The economist believes the regulator is responsible for at least half of the economic downturn.
Forecast of a social crisis in Russia
In the economist's view, the combination of these problems will ultimately lead Russia to a "social crisis." He suggested this could happen at a moment when no one is particularly expecting it.
Klepach compared the potential course of events to the revolutionary upheavals of 1917, noting that the February Revolution also came as a surprise to many.
At the same time, he does not forecast an economic collapse for Russia. According to him, the country will be able to avoid a total economic meltdown, but its lag behind other nations will continue to grow.
"Economically, we will not collapse, but our lag will continue to grow, with all the ensuing consequences," Klepach concluded.
Context of the forecast
Due to ongoing Ukrainian strikes deep into Russian territory, the economic situation in Russia's energy and financial sectors has significantly worsened.
Russia's largest state-owned banks — Sber and VTB — are reporting a deterioration in the quality of their loan portfolios, with growing problems among marketplace clients, particularly Wildberries, where an increasing number of borrowers are seeking debt restructuring.
Due to the fuel shortage caused by a series of Ukrainian strikes on Russian oil refineries, Russia has begun importing gasoline from India.
