Russia’s economy will grow 2.8% this year and a slightly slower 2.5% next year, a Vienna-based think tank has predicted, defying predictions that Moscow’s invasion of Ukraine would lead to economic ruin to lead.
Vasily Astrov, an economist at the Vienna Institute for International Economic Studies, said Russian President Vladimir Putin “will not run out of money for the war.”
“For the Russian economy, the question is rather what comes after the war, since it is currently completely dependent on it,” Astrov said.
There has been a huge increase in government spending, especially for the military.
Real wages in Russia rose by almost 8% in 2023 due to a shortage of skilled workers, while private consumption increased by 6.5%, according to a report by the institute specialized in Eastern Europe. Gross domestic product grew by 3.6% last year, despite massive Western sanctions.
For Ukraine, the think tank expects growth of 3.2% this year, after 5.3% in 2023.
But Kiev’s thinning air defenses are taking their toll as Russian airstrikes cut electricity to homes and industry.
“In the end, everything will hinge on the receipt of adequate and timely military and financial assistance from the West: in 2024 alone, Ukraine will face a financing gap of $40 billion,” Astrov said.
