BBC predicts that Russia’s economic growth will be short-lived despite current expansion

The War Economy of Russia: Will the Kremlin Face a Systemic Collapse?

In recent years, the Russian economy has experienced a strengthening under the leadership of Putin. However, this growth is expected to come to an end as BBC economics editor Faisal Islam predicts that the Kremlin will face a systemic collapse in the long term. The Russian economy has been transformed into a mobilized war economy, with a significant portion of the state budget allocated to military and security spending.

This shift has led to a squeeze on other areas of state support for the population, as funds are redirected towards the production of tanks, missile systems, and defenses in occupied Ukraine. Despite the imposition of oil sanctions, Russia’s economy has remained sustained due to its low effectiveness. Resource extraction remains at pre-war levels and Moscow has found ways to circumvent these measures by transporting oil to India and China using a “shadow fleet” of tankers.

The ongoing flow of foreign exchange into Russian oil, gas, and diamonds has helped alleviate some stress on the value of the rouble. However, Western leaders are skeptical that this can be sustained in the long term as they anticipate that oil and gas demand will peak while Russia’s competitors increase production, pushing it out of the market. Additionally, producing tanks and munitions is considered an unproductive part of Russia’s economy.

While Russia’s war economy has given it some extra time for now, it is ultimately expected to experience a systemic collapse in the long term according to Islam. While expecting its collapse by year’s end may not be advisable at this time, it is clear that Russia’s economic position is only becoming weaker in

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