Since the beginning of the war between Russia and Ukraine last year Russia has been in financial trouble ever since. The value of the ruble has decreased rapidly, the Russian stock market has closed, interest rates have more than doubled, and their credit rating has been labeled terrible. The hope with all these issues that Russia has been facing throughout this war will impede the progress of Russia during this war. Russia's government deficit last fiscal year was at about 37 billion dollars in value before the start of the war which is 2% of GDP. Economists believe that there is a chance this deficit will more than triple, being almost 5% of GDP.
Unfortunately wealth will not be a huge obstacle for the military as Russia's Sovereign wealth fund is at about 150 billion dollars and if they chose not to dip into that they can increase borrowing from the energy companies.
3 comments:
Hello Ethan,
This is definitely concerning for the economy of Russia, but they must understand that they got themselves into this mess. They also have the power to remove themselves from this mess, but as long as this conflict is present they will continue to face economic issues. ESPECIALLY INFLATION. This is a commonality during times of war and I know that it is definitely not helping there cause.
Overall, good post.
Although wealth is not an issue for Russia, it could still act as a deterrent for continuing the war with Ukraine. Where will they lay their priorities, with their own economic wellbeing or with expanding their sphere of influence? How Russia responds to their financial trouble with answer my question.
I have wondered how the war in Russia has been affecting their economy as I keep seeing how much money they delegate to it and they aren't really receiving any foreign help with funding, unlike Ukraine. I don't really feel for the Russian economy as they brought this war up and have been continuing it despite not having a huge edge over Ukraine. If they want to solve their economic problems simply end the war.
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