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Is Russia Headed for Economic Ruin in 2025? The Fallout of Prolonged Warfare

MajesticWombat 2y ago
As the war in Ukraine drags on into its third year, Russia finds itself at a critical economic crossroads. The Kremlin’s war chest is rapidly depleting, and sanctions are tightening the noose around key revenue streams. With the National Wealth Fund almost exhausted and budget deficits ballooning, Russia’s ability to sustain the current pace of war spending into 2025 looks increasingly dubious. While state-controlled media touts the narrative of resilience, the numbers tell a far grimmer story.
- drysine 1y ago
  Russian reserves are growing during the war time. https://tradingeconomics.com/russia/foreign-exchange-reserves https://tradingeconomics.com/russia/foreign-exchange-reserve...
deleted 2y ago
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deleted 2y ago
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inverted_flag 2y ago
There’s something darkly funny about the US and Russia both facing economic obliteration in the same year caused by their own hubris.
- toomuchtodo 2y ago
  Old men chasing status and power can’t help themselves as they run out of relevance runway, dragging the rest of us along for the unpleasant ride.
  - inverted_flag 2y ago
    Both share the same core goal too: to drag their countries back to the mid 20th century. Putin wants the Soviet Union back, and Trump wants 50’s America back. China is immune to this because that time period was uniquely terrible for them.
  - BMc2020 2y ago
    I like that term, 'relevance runway'.
    - toomuchtodo 1y ago
      It is a core component of my mental model. Everything has a time horizon: people, institutions, investments, etc. To understand influence potential/runway, time horizon * influence. https://en.wikipedia.org/wiki/Time_horizon https://en.wikipedia.org/wiki/Time_horizon
suraci 2y ago
[flagged]
mrandish 2y ago
Every since Russia fully invaded Ukraine I've been following media stories reporting on the Russian economy by citing western economist's and think tank's analyses. For the last three years it's been dominated by increasingly dire predictions and a sense of "they can't keep this up much longer." And this would raise my hopes that Russia would either collapse or Putin would be forced to negotiate seriously to stop the bleeding. Yet Putin somehow continues to keep finding ways to forestall collapse. As a non-expert, non-economist I'm now quite jaded when reading analyses like this and pretty heavily discount them. That's because I've had to conclude two things: First, the Russian economy is even more opaque to western analysts than the analysts already admit it is. And second, Putin's absolute dictatorial power and ability to have anyone who complains much thrown out a high window, provides myriad levers to continue kicking the can down the road. While I'm sure doing so will eventually result in serious costs and consequences, Putin only cares about getting control of most of Ukraine (either directly or by political proxy). He figures after that Russia can nurse its deep wounds and pay the piper slowly over a decade or more. He may be wrong, but I think that's his calculus. I think the only pragmatic course is to discount these analyses and operate as though Putin can continue to survive economically as long as he needs to (and then hope we're wrong and pleasantly surprised).
- MajesticWombat 2y ago
  True. I authored this article october 2024 and updated it to 2025 recently. The current Crude Price of only around 60$ adds to further pressure on the russian economy, but its resilience has been so far remarkeable in the sense, that there has been no significant sign of extreme pressure on the Ruble. The cannibalisation of the NWF continues and it will be available for another 2 years, the ballooning of forced private debt towards the military industrial sector gives a longterm headache to russias economy, but for the moment, even at 20% interest rate, seems to work. Russia has greatly increased its balance sheet and is thus leveraged and can continue its effort for some time. The problem is the size of the current effort. Russia cannot sustain on a prolonged basis a annual deficit of 30-50 Billion$ without permanently degrading ts currency. I think the economic game is decided long-term and i think that the costs are far greater than any possible profit for russia. And as Russia will somewhen need to transition to peace again, the hidden mounted costs will pushback in an brutal manner. It is somewhat discussed that right now the Russian economy cannot even simply stop to rely on its military industry - as the unemployment rates would skyrocket if production would be limited. But of course, this deficit spending (into things that are literaly going UP IN SMOKE) cannot continue forever without more Debts or Devaluation.

As the war in Ukraine drags on into its third year, Russia finds itself at a critical economic crossroads. The Kremlin’s war chest is rapidly depleting, and sanctions are tightening the noose around key revenue streams. With the National Wealth Fund almost exhausted and budget deficits ballooning, Russia’s ability to sustain the current pace of war spending into 2025 looks increasingly dubious. While state-controlled media touts the narrative of resilience, the numbers tell a far grimmer story.

drysine 1y ago
Russian reserves are growing during the war time. https://tradingeconomics.com/russia/foreign-exchange-reserves https://tradingeconomics.com/russia/foreign-exchange-reserve...

deleted 2y ago

[deleted]

deleted 2y ago

[deleted]

inverted_flag 2y ago

There’s something darkly funny about the US and Russia both facing economic obliteration in the same year caused by their own hubris.

toomuchtodo 2y ago
Old men chasing status and power can’t help themselves as they run out of relevance runway, dragging the rest of us along for the unpleasant ride.
- inverted_flag 2y ago
  Both share the same core goal too: to drag their countries back to the mid 20th century. Putin wants the Soviet Union back, and Trump wants 50’s America back. China is immune to this because that time period was uniquely terrible for them.
- BMc2020 2y ago
  I like that term, 'relevance runway'.
  - toomuchtodo 1y ago
    It is a core component of my mental model. Everything has a time horizon: people, institutions, investments, etc. To understand influence potential/runway, time horizon * influence. https://en.wikipedia.org/wiki/Time_horizon https://en.wikipedia.org/wiki/Time_horizon

suraci 2y ago

[flagged]

mrandish 2y ago

Every since Russia fully invaded Ukraine I've been following media stories reporting on the Russian economy by citing western economist's and think tank's analyses. For the last three years it's been dominated by increasingly dire predictions and a sense of "they can't keep this up much longer." And this would raise my hopes that Russia would either collapse or Putin would be forced to negotiate seriously to stop the bleeding. Yet Putin somehow continues to keep finding ways to forestall collapse. As a non-expert, non-economist I'm now quite jaded when reading analyses like this and pretty heavily discount them. That's because I've had to conclude two things: First, the Russian economy is even more opaque to western analysts than the analysts already admit it is. And second, Putin's absolute dictatorial power and ability to have anyone who complains much thrown out a high window, provides myriad levers to continue kicking the can down the road. While I'm sure doing so will eventually result in serious costs and consequences, Putin only cares about getting control of most of Ukraine (either directly or by political proxy). He figures after that Russia can nurse its deep wounds and pay the piper slowly over a decade or more. He may be wrong, but I think that's his calculus. I think the only pragmatic course is to discount these analyses and operate as though Putin can continue to survive economically as long as he needs to (and then hope we're wrong and pleasantly surprised).

MajesticWombat 2y ago
True. I authored this article october 2024 and updated it to 2025 recently. The current Crude Price of only around 60$ adds to further pressure on the russian economy, but its resilience has been so far remarkeable in the sense, that there has been no significant sign of extreme pressure on the Ruble. The cannibalisation of the NWF continues and it will be available for another 2 years, the ballooning of forced private debt towards the military industrial sector gives a longterm headache to russias economy, but for the moment, even at 20% interest rate, seems to work. Russia has greatly increased its balance sheet and is thus leveraged and can continue its effort for some time. The problem is the size of the current effort. Russia cannot sustain on a prolonged basis a annual deficit of 30-50 Billion$ without permanently degrading ts currency. I think the economic game is decided long-term and i think that the costs are far greater than any possible profit for russia. And as Russia will somewhen need to transition to peace again, the hidden mounted costs will pushback in an brutal manner. It is somewhat discussed that right now the Russian economy cannot even simply stop to rely on its military industry - as the unemployment rates would skyrocket if production would be limited. But of course, this deficit spending (into things that are literaly going UP IN SMOKE) cannot continue forever without more Debts or Devaluation.