Russia's wartime economy peaks and begins to deplete - Bloomberg
Photo: Russian President Vladimir Putin (Getty Images)
The growth of the Russian economy during wartime has peaked. Currently, a decline is being observed, Bloomberg reports.
"The peak for growth was passed most likely in the middle of this year. What next year’s growth trajectory will be is an open question — whether it will be a ‘soft’ or ‘hard’ landing for the economy," said economist Oleg Kuzmin in an interview with the news agency.
As Bloomberg reports, the rapid growth of the Russian economy has been driven by military production. However, despite its continued expansion, it is insufficient to compensate for the decline in other sectors of the economy.
It is also worth noting that recently the International Monetary Fund downgraded its forecast for the Russian economy, now projecting a growth rate of 1.3% in 2025, down from 1.5% previously.
Interestingly, in September, Russian production contracted for the first time since April 2022. In August, however, the Russian economy grew by 2.4% year-on-year, marking the slowest rate since the recession that followed Russia's invasion of Ukraine in 2022.
This slowdown outside of the military-industrial sector underscores Russia's further immersion into a war economy.
Russians are already facing crisis interest rates, and on Friday, the central bank may raise the key rate to 20% — as high as it was a few weeks after the invasion began. This move is aimed at curbing inflation. Any decline in the economy could lead to Russians experiencing "economic pain," from which they have largely been protected amidst the sanctions continuously imposed by the US and its allies.
Russia's economy
Earlier, we reported that Russia's oil export revenues increased in July 2023 as prices surpassed the cap set by the G7 countries. According to the IEA, Russia earned $15.3 billion, which is 20% more than in June, due to rising global prices and a decrease in oil discounts.
At the same time, the EU's Special Representative for Sanctions, David O'Sullivan, stated that sanctions have a serious impact on Russia, and this will become increasingly evident over time. According to him, Putin has been forced to "eat away" at the Russian economy.
