Russia is facing mounting economic pressure as the costs of its war in Ukraine continue to soar. Analysts warn that President Vladimir Putin may struggle to finance his military ambitions for much longer amid rising inflation and a faltering economy.
Defense strategist Nicholas Drummond told The Express that while Russia’s economy has temporarily adapted to a “war footing,” the country is now grappling with severe inflation and shortages. He added that economists largely agree Russia cannot sustain the conflict for more than another 24 months before financial strain makes it unviable.
Tensions have also surfaced between Putin and Russia’s banking sector. German Gref, CEO of Sberbank the nation’s largest bank revealed that Russia’s GDP growth nearly stagnated in July and August after a steep decline in the spring. Speaking at the Eastern Economic Forum, Gref described the second quarter as “practically technical stagnation.”
Putin, however, downplayed these warnings, insisting that the slowdown reflects a “soft landing” rather than a crisis, and noted that lending continues despite slower growth.
Economist Oleh Pendzin suggested Gref’s caution stems from concern over scrutiny from Russia’s Federal Security Service, the main successor to the KGB. According to Pendzin, public statements are one of the few ways economists can signal issues to top leadership without provoking direct accusations.
The Bank of Russia has also adjusted its policies amid the economic strain. Last week, it cut its benchmark interest rate by one percentage point to 17% to ease the impact on businesses and offset rising war expenditures. Earlier, the rate had been raised as high as 21% to control inflation. While inflation slightly eased in July and August, it remains elevated at 8.2%, and the central bank cautioned that expectations of future inflation could hinder a sustainable slowdown.
The combination of mounting war expenses, slowing growth, and persistent inflation highlights a critical challenge for Russia. Analysts warn that if current trends continue, sustaining the military campaign could become increasingly difficult for Moscow in the coming years.
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