One Decision Why Putin's War Economy is Soon to Crack
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Sep 4, 2025 
Join Alexandra Prokopenko, a Fellow at the Carnegie Russia Eurasia Center and former advisor to the Bank of Russia, as she unpacks the precarious state of Russia's economy. She reveals how military spending is straining resources and why drastic budget cuts are unlikely. Prokopenko discusses the paradox of sanctions which, instead of weakening the Kremlin, are fostering unity among Russians. With insights into labor shortages and the complexities of military recruitment, this conversation offers a deep dive into the cracks forming in Putin's war economy.
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Post‑War Overheat Then Slow Normalization
- Russia's economy is 'not great, not terrible' and returning to a low-growth normal of ~1–1.5% GDP.
- Inflation and a high key rate show it is cooling from an overheated, wartime spike.
Military Spending Crowds Out Civil Budgets
- Moscow is prioritizing defense spending over infrastructure, healthcare, and education.
- Expect civil budgets to be squeezed while military reconstitution remains the political priority.
Money Isn't Enough For More War Output
- Russia is near manufacturing and labor capacity limits for further military expansion.
- Adding money alone won't produce more soldiers or munitions without workers and factories.