Russia's Economy Is Doomed
Russia's economy faces significant challenges, including high military spending inflating GDP, persistent inflation, reliance on oil exports, and lack of foreign investment, leading to a bleak long-term outlook.
Read original article
Russia's economy is facing significant challenges despite recent claims of growth. While the International Monetary Fund (IMF) suggested that Russia's economy would outpace G7 countries, this perception is misleading. The apparent economic success is largely a facade, masking deep structural issues exacerbated by the ongoing war in Ukraine. Russia's military spending, estimated to be around 10% of its GDP, has inflated GDP figures but has also led to rising inflation, currently nearing 10%. The central bank's response has been to raise interest rates to 21%, yet inflation persists, and the rouble has weakened significantly. The economy is heavily reliant on oil exports, and a potential global financial slowdown poses a risk to this dependency. Additionally, the lack of foreign investment and a tight labor market are creating economic instability. The housing market is also at risk due to artificially inflated prices from government subsidies. Overall, the long-term outlook for Russia's economy is bleak, with predictions of a gradual decline in its global economic significance, as the country struggles to diversify and innovate under the current regime.
- Russia's economy is showing signs of distress despite claims of growth.
- Military spending related to the Ukraine war is inflating GDP but causing rising inflation.
- The central bank's high-interest rates have not curbed inflation or stabilized the rouble.
- The economy's reliance on oil exports makes it vulnerable to global market fluctuations.
- Structural issues and lack of foreign investment hinder long-term economic prospects.
Related
How the war in Ukraine is reviving Russia's rustbelt
The war in Ukraine is boosting Russia's economy through reactivated Soviet factories in regions like Chuvashia. This has led to job opportunities, wage growth, and increased industrial output, but inflation is affecting purchasing power. The economic effects are shaping political views and supporting the conflict, although experts warn of limited long-term impact.
Russia's population crisis gets worse amid 25-year-low birth rate
Russia's birth rate has fallen to a 25-year low, exacerbated by the Ukraine war, leading to increased mortality and emigration. Experts warn of long-term demographic challenges without effective policies.
Russian Central Bank Halts Currency Buying Until 2025 as Ruble Slides
The Russian Central Bank will suspend foreign currency purchases until the end of 2024 to reduce market volatility as the ruble declines to 113 per dollar, risking higher inflation.
Russia's rouble plunges to lowest rate since early weeks of Ukraine war
Russia's rouble has fallen to 110 per dollar, influenced by US sanctions on Gazprombank. Inflation may hit 8.5%, leading to a 21% interest rate amid stagflation concerns.
Ruble tumbles as Russia's war economy comes under increasing strain
The Russian ruble has fallen to 114.75 per dollar, influenced by low oil prices, sanctions, and high government spending. The central bank suspended currency purchases to combat rising inflation.
4 commentshttps://www.cbc.ca/news/world/russia-ruble-economy-putin-1.7...
… and that will be the indicator to watch. Otherwise, economic signals from the Russian people make central bank measures look Soviet, so there’s necessarily the question of collapse. But the average Russian appears willing to endure another 1998—-projecting that Putin will outlive the economy. The key will be: can Putin use his advantage with the people who control Trump to keep wild protectionist policies from depressing Asian demand for Russian oil?
I imagine "property rights" means "property rights for all, not just for oligarchs" in the above. Similarly "rule of law".
Related
How the war in Ukraine is reviving Russia's rustbelt
The war in Ukraine is boosting Russia's economy through reactivated Soviet factories in regions like Chuvashia. This has led to job opportunities, wage growth, and increased industrial output, but inflation is affecting purchasing power. The economic effects are shaping political views and supporting the conflict, although experts warn of limited long-term impact.
Russia's population crisis gets worse amid 25-year-low birth rate
Russia's birth rate has fallen to a 25-year low, exacerbated by the Ukraine war, leading to increased mortality and emigration. Experts warn of long-term demographic challenges without effective policies.
Russian Central Bank Halts Currency Buying Until 2025 as Ruble Slides
The Russian Central Bank will suspend foreign currency purchases until the end of 2024 to reduce market volatility as the ruble declines to 113 per dollar, risking higher inflation.
Russia's rouble plunges to lowest rate since early weeks of Ukraine war
Russia's rouble has fallen to 110 per dollar, influenced by US sanctions on Gazprombank. Inflation may hit 8.5%, leading to a 21% interest rate amid stagflation concerns.
Ruble tumbles as Russia's war economy comes under increasing strain
The Russian ruble has fallen to 114.75 per dollar, influenced by low oil prices, sanctions, and high government spending. The central bank suspended currency purchases to combat rising inflation.