Russia’s military-driven economic growth is slowing down after three years, with rising inflation and falling oil revenues. Ukrainian President Zelenskyy is urging U.S. President Donald Trump to impose fresh sanctions on Moscow for rejecting ceasefire efforts.
Russia Ukraine conflict:
- Since the 2022 invasion of Ukraine, Russia’s economy was kept afloat mainly through heavy military spending.
- However, signs of slowdown are emerging due to budget strain, weak oil prices, and the threat of new Western sanctions.
Surge in Military Spending
- Government spending has surged by 60% since before the war.
- Military expenditure alone accounts for 9% of Russia’s GDP, as per President Putin.
- Other economic sectors are either stagnant or declining, according to experts.
Economic Indicators of Slowdown
- GDP growth dropped to 1.4% in the first quarter of 2025, from 4.1% in 2024.
- Central Bank projects only 1–2% growth this year.
- Inflation remains high at around 10%, despite recent interest rate cuts.
- Falling oil prices, with Russia’s Urals crude averaging $52/barrel in May (down from $68 in January), have reduced energy income.
Budget and Revenue Pressures
- Russia increased taxes on corporates and high-income individuals to fund the war.
- Still, the 2025 budget deficit is expected to reach 1.7% of GDP, nearly triple earlier estimates.
Call for Sanctions and U.S. Response
- Ukrainian President Zelenskyy is urging Donald Trump to impose tougher sanctions to limit Russia’s war funding.
- Trump’s stance remains unclear, with possibilities ranging from tightening to easing existing measures.
- U.S. lawmakers are considering tariffs on countries buying Russian oil, such as China and India.
Conclusion
Russia’s war-focused economy is showing stress due to falling revenues and rising expenses. Sanctions and oil price trends will play a major role in shaping its future stability.
