Putin-Led Russian Economy on a Growth Trajectory, but War Economy Threatens Systemic Collapse in the Long Run.

BBC predicts that Russia’s economic growth will be short-lived despite current expansion

The Russian economy, under the leadership of Putin, has experienced significant growth in 2023 and is expected to continue growing in 2024. However, BBC economics editor Faisal Islam warns that the Kremlin will not be able to avoid a systemic collapse in the long term. The Russian economy has been transformed into a mobilized war economy, with a significant portion of the state budget allocated to military and security spending.

This shift has resulted in a squeeze on other areas of state support to the population, as funds are redirected to the production of tanks, missile systems, and defenses in occupied Ukraine. Despite the imposition of oil sanctions, the Russian economy has been sustained by the low effectiveness of these measures. Resource extraction remains at pre-war levels, and Moscow has found ways to circumvent the sanctions by transporting oil to India and China using a “shadow fleet” of tankers.

The ongoing flow of foreign exchange into Russian oil, gas, and diamonds has helped alleviate the stress on the value of the rouble. However, Western leaders are skeptical that this can be sustained in the long term and anticipate that oil and gas demand will peak while Russia’s competitors increase production, pushing it out of the market. The production of tanks and munitions is also seen as an unproductive part of the Russian economy.

While some experts predict that Russia may face an economic collapse within a year or two due to its high dependence on oil exports and its aggressive military actions abroad

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