Russia's economic growth is just an optical illusion. At least that's what the European Commission says, which has so far published an economic analysis on the impact of the sanctions. “While the Russian economy continues to grow on paper, a closer look reveals that this is due to the significant increase in military spending: 6% of GDP in 2024 (or 109 billion euros),” he said. we read in the document. According to Brussels, Russia has become, for all intents and purposes, a “war economy,” increasingly isolated internationally and overly dependent on state support. In 2023, the EU report recalls, the ruble lost more than 20% against the dollar, as the Central Bank was forced to increase interest rates to 16%. If we then consider inflation above 7%, “a contracting labor market” and a dependence “on energy resources and the importation of technologies from China”, the economic prospects of the country led by Vladimir Putin are anything but promising.
A war economy
The document drawn up by the European Commission takes up the estimates of the International Monetary Fund, which forecast growth of 2.6% in Russia for 2024, but places them in a broader context. And that's not all: according to the European executive, “the medium and long term prospects are gloomy” for the Kremlin. And the reason, needless to say, is linked to the war in Ukraine. “Very limited access to Western technologies due to international sanctions, erosion of human capital due to mobilization and emigration and massive military investments with little impact on civilian sectors will harm the economic potential of Russia in the long term”, predict Brussels analysts. Currently, the war in Ukraine is the main driver of Russian economic growth. Moscow's public spending has reached its highest levels ever and around 40% of the central government's budget is devoted to supporting the military's efforts. In 2024, Russia's military spending will exceed 6% of GDP, while in Italy it will be less than 1.5%.
A new barrage of sanctions
The publication of the report on the state of the Russian economy comes on the eve of the second year since the invasion of Ukraine by the Kremlin army. An anniversary which also coincides with the approval by the EU Council of the 13th package of sanctions against Putin's country. Today, the 27 EU countries decided to impose restrictive measures against another 106 individuals and 88 entities “responsible for actions that threaten or compromise territorial integrity, sovereignty and independence of Ukraine”. Measures that Moscow continues to consider illegitimate, with the Ministry of Foreign Affairs promising to respond by “expanding the list of European representatives banned from entering the Russian Federation”. American sanctions are then added to European sanctions. Today, Joe Biden announced 500 new sanctions, which will target “individuals linked to Navalny's detention, Russia's financial sector, the defense industrial base, supply networks, and individuals who evade sanctions on several continents”.
Cover photo: EPA/Gavriil Grigorov | Russian President Vladimir Putin during the meeting with Tucker Carlson at the Kremlin (Moscow, February 9, 2024)
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