Russia’s Mounting Economic Problems
For around two and a half years since the start of the Russian aggression against Ukraine, many analysts have predicted an inevitable economic crisis that sooner or later would hit Russia. However, by early 2024, these forecasts had proved wrong. The war with the neighboring country elevated the government military spending; the wave of emigration resulted in labor shortages and therefore pushed wages higher; the capital controls locked money inside the country and thus increased domestic demand. In addition to all this, Russian exports have not collapsed even despite the European and American energy embargo and the oil price cap,[1] remaining more or less at their 2021 levels after an extraordinary surge in 2022. In 2023, the Russian economy grew by 3.6 percent,[2] the ruble-to-dollar exchange rate was just 15 percent lower than before the attack on Ukraine (which is, I would say, much less than the accumulated inflation for both 2022 and 2023),[3] and the real wages shot up by 8.5 percent while the inflation was accelerating, but still “remained under control” at 7.42 percent.[4]