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Russia's economy at the limit: Putin's arms madness is bringing crises!
Russia's economy is showing some alarming declines in the Ukraine conflict. NATO warns of a critical point.
Russia's economy at the limit: Putin's arms madness is bringing crises!
Russia's economy remains under significant pressure as the war in Ukraine continues without end. NATO warns that Russia has reached a critical point in its ability to continue the conflict at current levels. According to a recent NATO report, Russia can fight the war until at least 2027, but at a point where defense production has peaked and cannot be increased further. In recent months, President Putin has invested heavily in the defense industry to keep production of tanks and weapons at full speed. Nevertheless, satellite analyzes show that stocks of old Soviet tanks have shrunk by at least half since the start of the war.
Recruiting personnel for the military is becoming increasingly difficult. Russia recruits mercenaries from various countries, especially Asia and Africa. A shortage of skilled workers also affects other important economic sectors such as construction and food. In 2024, Russian industry hired 47,000 foreign workers. For 2025, Putin approved cuts to the federal budget on June 24, which also include reductions in five state programs.
Economic challenges and corporate sentiment
Although Russia's economy largely resisted Western sanctions in the early years of the war, current figures show a deterioration in the business situation. According to reports, 34 percent of Russian companies said that their conditions worsened in the last half of the year, a marked increase compared to 24 percent in December 2022 and 16 percent in May 2024. A quarter of companies stopped or slowed down their investment projects, while 13 percent suspended non-essential projects.
The industries experiencing the largest declines in sales are mining, heavy industry, chemicals, oil and gas, and transportation. This is all happening against the background of a high key interest rate from the central bank, which 42 percent of company representatives identify as the biggest challenge. Compared to the previous year, the proportion of companies that see this key interest rate as a problem has increased by four percent.
Optimism and challenges
Another point of concern is the lack of skilled workers, which 48 percent of respondents cited as their biggest concern. Concerns about foreign trade restrictions have decreased significantly compared to the previous year; only 20 percent cite this as a key challenge, compared to 63 percent in 2022. Concern about geopolitical risks has also decreased - only 15 percent of respondents see this as a major problem, compared to 56 percent at the start of the Ukraine war.
Overall, it is clear that Russia's economy is in a fragile situation, with both external and internal factors having a significant impact on future development.