I’m pretty sure russia is going to start collapsing after the war if not during it. They will have to burn everything they have into the war to keep it going in face of Ukraine’s heroic defence.
The Russian economy seems amazingly resilient. Even this story, which tries to show Russia is hard pressed, shows their economy is growing this year?!
The article describes the economy as “not great”. Which is a weird statement, because “not great” could be said about the rest of the world too, which has also suffered from high inflation interest rates and reduced production. I don’t see anything in this article that shows it’s worse in Russia than the parts of EU, that are also hit hard by the effects of this war.
But behind the numbers, I guess war stimulates economic growth, because the state uses a lot of money on the wart. And a significant share of the economy is actually waste on the war effort, that has no benefit for the population or society or long term improvements.
But let’s do whatever we can to make it as difficult as possible for Russia. At some point their war effort will collapse due to the stress on their society, both economical and political.
And at the same time do what we can to help Ukraine win the war, and make their country whole again.
We can assume that all (Kremlin) numbers on the Russian economy are doctored to make people believe that Putin can fight this war for years and years to come.
AFAIK there is some solid open source intelligence out there, suggesting that russian economy is dire in some sectors. Prices for consumer goods are the easiest example here.
You are right in that war makes the economy go brrrrrt in some sectors but the money spend there is thrown out of the window. Every person who works to build new tanks is a person less to maintain bridges, roads and infrastructure in the oil and gas industry.
And when it comes to government spending in Russia, it means a lot of corruption will be happening and money flows to the top.
Every soldier on the frontline is a farmer or woodworker less back in mother Russia. Families lose their main income when the father dies, even though the mother spend their last savings on a bullet proof vest that was at some point imported from China.
You have to keep in mind that the Russian economy is comparable to Italy or the Netherlands. The impact of the war on EU countries isnt noticeable compared to that. At worst, it gives us problems that we can easily solve with money.
Another thing about Russia is their demographic. They will lose and already lost a lot of their most productive workforce. Additionally a lot of young and well trained men left Russia in the last two years. Even more try to stay in the university as long as possible to not get drafted.
Russia is so fucked man!
[Edit] lot of words
Yes many good points, and I just read another economic report here, that together makes a more complete picture.
You are absolutely right Russia is fucked. Because while they are maintaining their economy by public spending. They have a serious problem with worker shortage. This is not exactly news, but to sum it up, 1 million people leaving Russia, at least ½ a million either participating or a casualty of war. People participating in building the war machine, and finally the low demographic influx. Combined with increased public investments, and foreign sanctions.
https://markets.businessinsider.com/news/currencies/russia-economy-inflation-60-percent-falling-ruble-steve-hanke-2023-7 From the article: “According to the Central Bank of the Russian Federation, Russian inflation expectations jumped to 11.1% in July.”
It seems to me now, that despite the Russian economy being stressed, it is at the same time overheating, to barely maintaining status quo. This is of course very different from what I stated earlier, but I got a bit of extra info. ;)
That means the Russian economy is in a bubble, except this is not just financial bubble, this is all of the Russian society, including public spending and a government dictated financial bubble, and as I understand it, even government dictated production at a loss. When that collapses, it will be really bad for Russia.
Making something seem resilient and successful is very easy in the short term when you have control over what data is coming out of it.
There were companies that were commiting fraud or were straight up ponzi schemes that seemed very successful, all while operating under some oversight from the western governments and the public. Some lasted many years before the facade crumbled and they collapsed.
Now imagine what an entire corrupt government with full control of the reports, the media and no one to answer to, is capable of.
Using resources on a war does stimulate the economy. That’s just the Broken Window Fallacy.