With just two years of war in Ukraine following the Russian invasion, many experts are wondering how Russia manages to ensure that its economy not only avoids significant inflation or recession, but also grows even faster than other European countries . A move that seems to be working well for the Kremlin, however An economist warns that Moscow’s economic situation could collapse sooner rather than later and is on the “brink of death.”
During this time, the United States, the European Union and the United Kingdom have imposed more than 15,000 restrictions and sanctions against Russia as well as its leaders, oligarchs, society or the economy itself, and of course against Putin. Measures aimed at decimating the institutions and sectors of the Russian economy and preventing the Kremlin from financing a long-term war.
Despite Western sanctions, Russia is finding ways to save its economy. According to the International Monetary Fund The Russian economy grew faster than the entire G7 last year and will continue to do so in 2024. So, The IMF highlighted Moscow’s economic strength and raised its growth forecast to 2.6% from 1.1%.
“Russia is on the brink of death”: An economist warns of an impending catastrophe for the Russian economy
In order to achieve self-sufficiency, among other things, Moscow is seeking rapprochement with China and India, which will enable it to avoid economic attacks from Western countries. However, economists believe that this is only in the “short term”. And that’s it Russia represents a “war economy” and invests all its forces in military spending.
“The Russian economy faces death from thousands of cuts”explains British economist Roger Bootle in The Telegraph. Last year, the inflation rate in Russia averaged 5.9%. And it is expected to rise to 7.5% this year.
“It seems likely that the damage to Russia’s manufacturing capacity from the loss of Western technology and critical supplies will increase over time,” Bootle continued, adding that the key vulnerabilities remain “Energy prices”.
“If they fell sharply, the budget deficit would skyrocket and the current account surplus would fall, putting pressure on the ruble and causing inflation to rise even further. If that were to happen, the economic screw would tighten even further,” he concluded.
