How Much Longer Can War Prop Up Russia's Economy?

Economic Impact of War & Sanctions - Despite war and sanctions, Russia's economy has shown resilience, even outpacing some advanced nations in growth in 2024 [1][5] - Initial expectations of sanctions crippling the Russian economy, such as "turning the ruble to rubble," did not fully materialize [4] - Russia reoriented its economy by shifting export markets to China and India, primarily for fuel exports, mitigating the impact of sanctions [7] - The war has acted as a stimulus, with military spending increasing from approximately $50 billion to nearly $150 billion annually since 2022 [2][3] Financial Sustainability & Future Outlook - Russia is currently spending more than it earns, depleting its reserves to supplement its budget [9] - At the current rate of expenditure, Russia's reserves are projected to be depleted around 2030 [9] - Oil and gas sector contributes about 20% of Russia's GDP, but analysts warn that current spending levels are unsustainable [8] - Potential secondary sanctions, such as 100% tariffs on those buying Russian oil, could be catastrophic if major buyers like China and India cease purchases, as oil and gas revenues account for 1/3 to 1/2 of Russia's annual budget [10] Geopolitical & Economic Risks - Increased military spending has led to a decrease in unemployment, reaching a 30-year low [8] - While wage inflation has outpaced general inflation, improving the standard of living for Russians, this is considered unsustainable [12] - Experts anticipate Russia will maintain elevated defense spending even after a potential ceasefire, driven by perceived threats [13][14]