Most Western companies and investment funds have interrupted their relations with Russia in the last few years, but the events there influence the rest of the world, so it is important to consider how events can develop in the near future.
Russia launched a war with Ukrainian in February 2022. This article examines the economic foundations of the Ukraine’s war before launching the war and takes into account the impact of the likely impact of the conflict on its economy.
Generally speaking, most Western countries have pulled out the Russian market, but their businesses or franchises have been taken over by local or Asian companies and continues with little confusion. For production (eg making trucks), this is a bit more complicated for designs, parts, etc. Due to its compatibility, the place is filled by Chinese companies, but they may bypass existing manufacturers and create their own supply chain.
As far as exports are concerned, the Russian sales of oil and gas to Western Europe are significant, although to some extent. As these are universal goods, they are not as sensitive to sanctions as products manufactured, and Russia has found new sales stores in China and India, although there was some contraction of general sales.
Russia’s exports, including before the Ukrainian war, were predominantly primary products, whose manufacturers were restricted to some special sectors. This is an export profile of the developing, not the developed country. Their peers like Turkiye, Poland, etc. Design is now predominantly manufacturers that reflect their integration into EU and other markets. Russia has a major manufacturing sector, which was a supplier/on the domestic market.
One of the striking indicators of the Russian economy is that its current account has been constantly surplus since the Millennium. This means that Russia has very little state external debt and in fact it has accumulated an additional foreign asset, some of which were frozen after the outbreak of the Ukrainian war.
This table shows that the general exports fell by about one -fifth from 2022 to 2023 -the first full year of the Ukrainian war, but this increased to China and India. Some of the decline is due to Russia due to oil and gas, due to the remainder of the trade with Europe. Import was $ 208 billion in 2023, according to the same source of data, so it was a significant trade surplus.
Russia had a very low debt/GDP ratio before the Ukrainian war.
Note that Russia’s 20% debt/GDP ratio is comparable in the United States and in many EU countries with 80-120%. Russia’s debts of the 1990s were burned by hyperinflation, but since Millennium inflation was controlled and the low debt ratio reflects careful fiscal treatment. The deficit increased relatively in 2020, but it was similar to other countries due to the Covid downturn.
www.rosstat.gov.ru Statistical Yearbook 2023
Employment in Russia is quite diversified according to the sector:
Note that manufacturing employment in 2022 combines 22% of total employment and production, mining and agriculture. Construction jobs were 9.2% of employment.
One of the striking things about data is how strong Russia’s vital statistics were before the outbreak of the Ukrainian war for public finances, employment diversification and formality, housing, etc. Compared to countries such as Argentina and Brazil, who have also stumbled in Russia, who overcome their problems, while the two countries continue to fight in balance between government finances.
This is noteworthy because there was no institutional heritage left by the former Soviet Union, and everything had to be built from scratch. At the beginning of the economic one of the weaknesses is the low level of manufacturing exports. On the institutional front, Russia occasionally presents signs of authoritarianism, such as how to deal with dissidents, not to mention that he was in the war with Ukraine.
It is difficult to answer how Russia’s economy can be treated with the Ukrainian war, as there is not enough data in public ownership. Some points should be noted:
- Restriction of export to Europe and redirection to Asia with some reduction and prices
- Leaving Russian joint ventures by Western companies with some disruption from supply chains, but place completed by Chinese companies
- Labor market tribe for the Ukrainian war
- The cost of military equipment, but also to increase military production
- Inflationary pressure due
Russia entered the Ukraine war with its state finances and external reports in excellent health, so there is probably some way to really be under pressure.
The Russian armed forces increased from 1.5 meters to 1.5 from February 2022. IISS estimates that from January 2025, Russia killed at least 172.00 soldiers and 611,000 were injured in the conflict until then. (Iiss 10feb2025). Given that 71 million applications were used in 2022 and millions of inactive have not yet indicated the labor market interruption.
Sipri – April 2025 (military_spending_in_russias_budget_for_2025) It is estimated that defense spending of 2025 will be 7.2% of GDP. It is worth noting that since Russia translates most of the military hardware locally, the increase in military spending is indeed increasing the domestic economy.
If we look at the current situation for Russia, then:
- According to the data, the Russian economy seems to be comfortable to maintain conflict for several years.
- China wins that Russia is predominantly power that Putin can take a break as Russia does not want to become China’s walking in the long run
- Russian accident data can cause some anxiety, but the nature of the political system may not lead to pressure on the system
- It seems unlikely that the United States will contribute more money to Ukraine so sooner or later they have to settle with Russia
- Probably the Acceptance of NATO under the Trump administration of Russia, retaining the conquered area in East Ukraine and the Crimea, with any legal recognition
From READ full report on the https://www.marketresearch.com/latin-report-v4296/economy-russia-39205743/
Paul Dixon founder of the Latin report. Economics articles on various topics are very widely read, and often ranked search results for months and even after the first publishing.
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