Against the Clock? Why Russia’s War Economy is Running Out of Time

Authors: Dr Volodymyr Vlasiuk, Sergii Povazhniuk, Dr Vadym Yemets and Dr Luke Cooper

This report assesses the impact of Russia’s full-scale invasion of Ukraine in 2022–2024 on the Russian economy through an analysis of macroeconomic indicators, the sectoral structure of the Russian economy, the dynamics of foreign trade, the structure of the federal budget revenues and expenditures, household income and changes in Russia’s financial reserves.

The report argues that the Russian economy should not be treated as a metaphysical entity, able to uniquely free itself from the trade-offs that the war entails. The Russian economy is deteriorating, with alternative estimates for GDP growth suggesting the economy is in recession and inflation is likely running at approximately double official estimates. In the context of war and cumulating sanctions, this generates distributional tensions between the civilian and military economies, and impacts the economy’s capacity to generate external revenue. Of particular importance is the fact that 20% of Russian society has benefited financially as a result of the war and might be more inclined to continue it regardless of the interests of the majority.