The Cost Of War: How Russia's Economy Will Struggle To Pay The Price Of Invading Ukraine
NDTV
Generous estimates suggest the Russian economy could shrink by 7% next year, instead of the 2% growth that was forecast before the invasion.
The invasion of Ukraine has placed Russia on the verge of bankruptcy. Interest rates have doubled, the stock market has closed, and the rouble has fallen to its lowest level ever.
The military costs of war have been exacerbated by an unprecedented level of international sanctions, sustained by a large coalition of countries. Russian citizens, now unable to spend at IKEA, McDonald's or Starbucks, are not allowed to convert any of the money they do have into foreign currency.
Generous estimates suggest the Russian economy could shrink by 7% next year, instead of the 2% growth that was forecast before the invasion. Others say the drop could be as much as 15%.
Such a fall would be bigger than the 1998 crash of the Russian stock markets – a major shock to an economy which has hardly seen any growth in the last decade, and failed to diversify away from exporting oil and gas. Meanwhile the European Union is planning to drastically decrease its energy dependency on Russia, while the the US and the UK have begun to phase out their own, more limited, imports.
