Russia's economy is booming despite sanctions: rich Russians and high risks!

The Russian economy is shown in 2023 with growth of 3.6 percent, which has been the strongest growth for a decade. Despite the continuing sanctions by the United States and the EU, which has so far had little success in the influence of the economic stability of Russia, such as FOCUS online

The armor expenditure plays a crucial role in this economic growth. For 2025, Russia has planned a defense budget of 13.5 trillion rubles, which corresponds to around 130 billion euros. The armaments industry has created 520,000 new jobs in this context, but 160,000 jobs remain vacant. Average salaries in Russia are expected to increase by 19 percent in 2024 compared to the previous year, which leads to an increase in consumption expenditure.

economic challenges and risks

Despite growth, the Russian economy threatens to overheat due to high demand for loan and increasing wages. In order to counter inflation, the Russian central bank increased interest rates from 7.5 percent in 2023 to 21 percent. In October and November 2023, the inflation rate was 11.1 percent. Banks' lending increases, even to customers with poor credit rating, which increases the risk of a banking crisis in the next two years. The high interest rate load complicates to many companies, which has doubled the interest burden. In addition, the bank's equity equipment is low, which weakens the resistance to credit cases.

The effects of the Ukraine war and sanctions are clearly noticeable in the Russian economy Nevertheless, the average assets in Russia increased by almost 20 percent in 2023, while the total number of US dollar millionaires increased. Between 2008 and 2023, the average assets per adult in Russia rose by 608 percent (in ruble). On July 1, 2024, Russia was upgraded by the World Bank Group by countries with medium -sized incomes to the category of countries with high incomes.

In addition, economic growth in 2023 was influenced by climbs in the areas of trade (6.8 percent), financial sector (8.7 percent) and construction industry (6.6 percent). At the same time, the sanctions burden the state revenue from the oil and gas business, with six percent in April 2023 to 1.23 trillion rubles. President Putin also faces challenges to find buyers for Russian gas because negotiations have stalled in China. Several Chinese banks have also demolished their relationships with Russia and hired payment transactions, which increases the concern for the solvency of Russia. The central bank plans to increase the interest in July 2024 by 200 basis points to 18 percent in order to combat high inflation. Overall, the Russian economy depends heavily on high military spending, which experts see as problematic for sustainable war economy.