The Russian economy is weaker than the Kremlin claims, according to the NYT

Russia’s official economic indicators may significantly distort the true state of affairs, and the Russian economy is in a much worse condition than the Kremlin is trying to portray.

This is discussed in an article in The New York Times written by Swedish Foreign Minister Maria Malmér Stenergård.

According to her, the Swedish government commissioned a series of studies involving economists and intelligence agencies, which point to a significantly greater fragility of the Russian economy.

In particular, while official Russian statistics claim that the country’s economy grew by approximately 13% between 2020 and 2024, new analysis shows the opposite—an actual contraction of 8%.

The official inflation rate is also being called into question. Although Moscow had projected around 10% for 2024, the Russian Central Bank’s hike of the key rate to 21% may indicate far more serious inflationary problems.

The report notes that the Russian economy is increasingly feeling the effects of the war, sanctions, labor shortages, and rising military spending.

According to British government estimates, international sanctions have already cost the Russian economy at least $450 billion since the start of the full-scale war.

Fluctuations in oil prices could deal a separate blow to Moscow. According to Stenergard, the Russian budget requires an Urals oil price of over $100 per barrel to remain stable.

The article also mentions Ukrainian strikes on Russian oil infrastructure, which are reducing the Kremlin’s ability to generate additional revenue from energy exports.

The author emphasizes that Western countries should intensify sanctions pressure, specifically by considering a complete ban on maritime services for Russian vessels transporting oil, gas, and coal.