Geopolitics Decanted with Dmitri Alperovitch Keeping Russian Economy Afloat: Kremlin's Economic High Wire Act
Oct 22, 2025
Dmitri Alperovitch chats with Chris Weafer, CEO of Macro-Advisory, an expert on the Russian economy with decades in Moscow. They dive into the current state of Russia’s economy, dissecting fiscal pressures and budget challenges amid ongoing military spending. Chris analyzes how fluctuating oil prices and sanctions threaten economic stability. He warns that prolonged war efforts could strain recovery, while highlighting the Kremlin's precarious balancing act to maintain economic flow without imminent collapse.
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Stable But Slower Growth
- Russia's GDP growth has fallen from ~4% to about 1.2% in 2024, indicating a sustained low-growth equilibrium.
- There is no immediate sign of recession, financial collapse, or large-scale social unrest at current levels.
High Rates Cool Inflation But Hurt Firms
- The Kremlin raised interest rates to 21% to cool consumer demand and curb inflation, which succeeded in reducing inflation from ~10% toward 8%.
- High rates fix inflation but suppress private-sector borrowing, increasing bankruptcies in vulnerable sectors.
Sovereign Cushion Is Shrinking
- The National Welfare Fund's liquid portion is mostly exhausted after financing recent deficits, leaving roughly $40–50 billion available.
- That depletion creates a tight runway unless borrowing or higher oil revenues appear.