Putin's war plans: Russia's economy on the abyss!

Putin's war plans: Russia's economy on the abyss!

Moskau, Russland - Moscow - In the past few months, Wladimir Putin has made decisive course for the Russian economy, which should not only benefit the military. The Ukraine conflict increasingly serves as a lender for Russia's economic survival strategies, but this policy could harm more than benefits in the long run. Due to the massive redirection of financial resources to warfare, Putin has created a circulation that could be difficult to break through.

The future budget plans of the Kremlin indicate an unprecedented militarization of the Russian economy. For example, a record height of 10.4 trillion rubles for defense and internal security is sought for 2025, which would make up over 6% of gross domestic product (GDP). These plans clearly show that for Putin the continuation of the war is of top priority, despite all the economic challenges that arise.

planned arms expenditure in the record area

According to reports, the trend towards increasing armaments expenditure should remain unbroken. Defense spending should increase to 17 trillion rubles by 2025, which would correspond to 40 percent of total government spending. Such figures are reminiscent of the times of the Cold War when the focus was on military strength. Many analysts warn that such financial relief for the war economy could be at the expense of important public sectors.

The advisor Andrius Tursa from Teneo emphasizes that investments in education, health and infrastructure will suffer significantly from, which will have a negative impact on the quality of life of the population in the long term. "This is a vicious circle," says Tursa. Putin's priorities could seriously endanger not only the current, but also the future competitiveness of the Russian economy.

inflation and shortage of skilled workers as critical challenges

The unchecked inflation remains a great concern for the Russian population. After the announcement of the budget, the fear of further inflation increases, which could increase by an additional 0.5 percentage points in 2024. The Russian central bank was already forced to increase the key interest rate significantly in order to cushion inflationary pressure. These measures further tighten the location of the consumer.

The current data of the Russian statistics authority show that inflation has increased in May 2024 at 8.3 percent to the highest level since February 2023, which is well above the official goal of 4 percent. In addition, there is an explicit lack of qualified workers, especially in the defense sector, since many soldiers have to live their lives on the front.

The continuing challenges could drive Russia into a recession if the conflict should not be defused soon. Nevertheless, Putin is faced with the decision to continue the war because the possibility of withdrawal could endanger the stability of his government. Therefore, it remains to be seen how this complex location will develop, especially in view of the economic and political dynamics that work in the background.

For more information about the economic consequences of the war investments under Putin's regime, you will find details in the current report at www.suedwest24.de .