Russia’s economy, which has faced setbacks because of sanctions, war-expenses, and rising costs, has shifted from growth toward stagnation. GDP growth has slowed down and some indicators—like manufacturing purchasing manager indices—suggest real activity is contracting. Corporate cash flow has been weaker, wages are falling, and stock markets are under pressure. The authorities are pulling back on expansive fiscal stimulus, which tightens monetary policy, and trying to contain inflation through high interest rates. Despite the hardships, unemployment remains low and many Russians claim their individual economic situation remains reasonably good, largely because real wages are still relatively strong.
It’s surprising that the Russian economy has managed to stay afloat under all the pressure. The fact that many citizens are still seeing slight improvements in wages and a relatively consistent quality of life is also surprising. Still, the strength of the economy is weaker than it seems. At the end of the day, Russia is still experiencing slow growth, falling profits, and rising inflation.
Source https://www.economist.com/finance-and-economics/2025/09/21/how-russias-besieged-economy-is-clinging-on
5 comments:
I like how you did a great job highlighting both sides of Russia’s economic situation : the pressures from punishments, inflation, and falling profits, alongside the surprising resilience in wages and employment. Given that Russia is relying heavily on high interest rates and reduced fiscal stimulus to fight inflation, do you think these policies can keep the economy stable long-term, or will they eventually make conditions worse for ordinary citizens?
Russia's ability to maintain low unemployment while facing sanctions and war-related costs really highlights how uneven economic status can be. On the surface, steady wages suggest resilience, but failing corporate profits and contracting activity point to cracks underneath. It raises the question of whether this stability is sustainable or if households will start feeling the strain more directly over time.
While unemployment being low is unsurprising to me, as their military is currently trying to seek recruits & volunteers, what is surprising to me is that the Russian economy is still managing to stay relatively afloat. A real question would be how sustainable the economy is as they have virtually no external help, as their allies are struggling as well.
Russia’s economy exhibits a peculiar blend of resilience and fragility. On the surface, low unemployment and steady wages suggest stability, but underneath, shrinking profits, weak investment, and stubborn inflation point to deeper structural problems. The government can maintain stability in the short term, but without new growth drivers, stagnation appears inevitable.
It’s surprising how Russia’s economy is still holding on despite sanctions and war costs. However, the cracks are definitely starting to show.
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