Russia’s economy will grow by 2.8% this year and expand at a slightly slower 2.5% next year, a Vienna-based think tank has forecast, defying predictions that Moscow’s invasion of Ukraine would lead to economic ruin.
Vasily Astrov, an economist with the Vienna Institute for International Economic Studies, said Russian President Vladimir Putin “will not run out of money for the war.”
“For the Russian economy, the question is rather what comes after the war, as it is currently completely dependent on it,” Astrov said.
There has been a massive increase in public spending, especially for the military.
Real wages in Russia rose by almost 8% in 2023, driven by a shortage of skilled labour, while private consumption increased by 6.5%, according to a report by the institute specializing in Eastern Europe. Gross domestic product grew by 3.6% last year, despite massive Western sanctions.
For Ukraine, the think tank expects growth of 3.2% this year, following 5.3% in 2023.
But Kiev’s increasingly thin air defences are taking a toll, with Russia’s aerial assaults cutting electricity to homes and industry.
“Ultimately, everything will stand or fall on the receipt of adequate and timely military and financial aid from the West: In 2024 alone, Ukraine faces a financing gap of $40 billion,” Astrov said.
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