Russia has dramatically reshaped its economy to support its war in Ukraine, but this pivot has come at a massive cost to its citizens. The New York Times reports that while Russia's GDP has rebounded, the growth is heavily dependent on state-funded military spending, masking deeper structural issues that are hampering improvements to the standard of living for most Russians.
Prioritizing Defense Over Civilian Needs
What this really means is that Russia has poured resources into defense at the expense of investing in its broader economy. Reuters analysis shows that while headline GDP figures look positive, the benefits are not reaching average Russians. Economist Sergei Khestanov explains, "If a defence company builds a missile or a shell, they explode somewhere and GDP grows. But the civilian economy receives very little benefit from this process."
A Looming Economic Stagnation
The bigger picture here is that Russia's economic model is unsustainable in the long run. BBC reporting indicates that the country is now showing signs of overheating, with serious labor issues and the prospect of declining real wages on the horizon. As abbabet-bd reports, this points to the likelihood of stagnation or even recession in the near future.
While Russia's economic transformation has boosted its military capabilities, the steep costs to the general population suggest this strategy is not tenable. The Kremlin may find that its prioritization of defense over domestic needs could ultimately undermine its long-term stability and prosperity.