Ukrainecast
Putin's war economy: Are Russians feeling the pinch?
Oct 4, 2024
Joining the discussion are Stephanie Baker, a senior Bloomberg writer and author of "Punishing Putin," and Alexander Gabuev, director at the Carnegie Russia Eurasia Centre. They dive into Russia's dramatic 25% increase in defense spending amidst mounting economic challenges. Is the war economy sustainable? Despite Western sanctions, Russia shows surprising resilience, bolstered by oil revenues. The guests explore socio-economic divides in Russia, with labor shortages and shifting demographics raising questions about the long-term viability of this military-driven model.
23:50
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Quick takeaways
- Russia's defense spending is projected to rise significantly, prioritizing military goals over social welfare amid Western sanctions and economic pressures.
- Despite signs of resilience and economic growth, challenges like rising inflation and labor shortages threaten the sustainability of Putin's wartime economy.
Deep dives
Russia's Increased Defense Spending
Russia's defense spending is set to increase by an astonishing 25%, reaching an all-time high of 13.5 trillion rubles in 2025. This allocation, accounting for approximately 40% of the government's budget, underscores the determination of Vladimir Putin to continue the war in Ukraine. Despite the pressures of Western sanctions, Russia has seen its oil export income exceed pre-war levels, contributing to robust economic growth even in the face of isolation. This lofty military expenditure indicates that the Kremlin prioritizes military goals over social welfare, with defense spending now surpassing that of social programs for several years.
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