For the past two years, Russia has displayed economic growth of more than 4 %, a figure that could make many European savings pale. However, behind these apparently solid indicators, the reality on the ground is quite different: high inflation, degraded consumption, persistent shortages. The country, largely converted to “War economy”seems to reach the limits of a model based on military expenditure and energy rent.
In short
- Russia has posted economic growth of more than 4 % for two years, but it is essentially based on the war effort.
- According to Adina Revol, ex-spokesperson of the European Commission, this growth does not create real wealth and masks a declining economy.
- Signs of breathlessness are increasing: GDP only increased by 0.8 % in February 2025, against 3 % a month earlier.
- Without economic diversification, Russia is exposed to a budgetary wall and a loss of resilience in the face of external pressures.
Growth fueled in Russia by cannons, not by factories
Russia is overwhelmed by rising increased military spending and an increasing energy crisis. This situation leads to the scarcity of financial resources.
“The Russian economy depends more than ever on the war effort and its fossil fuels”,, affirm Adina Revol, former spokesperson for the European Commission, invited to BFM Business on June 10.
For her, this growth dynamic, which allowed Moscow to record +4.1 % GDP in 2023, is not based on any real wealth produced, but on an almost entirely reoriented economy towards defense.
Indeed, data from the Russian statistical agency Rosstat confirm that the production of finished metallic products jumped by 35 %, while that of electronic and optical components, strongly linked to the defense industries, increased by 29 %.
The war effort therefore does not support diversified growth, but a partitioned economy dependent on the continuation of the conflict.
This repositioning is accompanied by persistent inflation, particularly marked in the basic sectors. In June 2025, the Russian Central Bank (BCR) noted an annual inflation of 9.8 %, largely carried by food products.
The price of potatoes, basic necessity, Tripped in one year to reach 85.4 rubles per kilo (approximately 1.05 dollars). This record level is partly explained by:
- A bad harvest;
- An increased dependence on imports, especially from Egypt, which are no longer enough to meet domestic demand.
At the same time, The labor shortage Linked to military mobilization and exile estimated at nearly a million people feed an increase in wages, without productivity. This situation leads to an overheating economy, both constrained and ineffective.
Towards a structural shortness of breath?
After months of growth fueled by the war machine, the Russian economy shows signs of net slowdown. In February 2025, GDP growth fell 0.8 % in annual shift, compared to 3 % in January. This is the lowest level since March 2023.
“An economy transformed into war economics does not produce real wealth. The indicators are in the red “specifies Adina Revol.
The Russian central bank, although slightly more optimistic, now provides moderate growth of 1 to 2 % for 2025, far from the artificial peaks recorded during the previous two years. The Ministry of the Russian economy aims at 2.5 %, but without indicating concrete levers to support this dynamic in an increasingly constrained context.
The fall in oil prices is another major factor of weakening. In one year, the price of a barrel of Brent fell 18 %, to establish itself around $ 67. However, revenues from hydrocarbons represent a third of Russia's tax revenue, an influential member of the BRICS group.
This withdrawal directly threatens the country's budgetary balance, especially since the room for maneuver is quickly reduced. The Russian sovereign fund (RDIF), which served as a financial shield by drawing on state reserves, sees its liquid assets fall suddenly: from 108 billion euros in early 2022, they only amount to $ 36 billion in early 2025.
This withdrawal testifies to a gradual exhaustion of the “War manna”which cannot be funded indefinitely without changing the global economic trajectory.
The short and medium -term prospects are darkening. If the Kremlin does not quickly redirect its economy to productive and resilient sectors, it may find itself facing a budget wall.
Dependence on raw materials, the growing weight of military debt, and the inability to relaunch private investment (braked by 20 %interest rates) reduce adaptability. The European Union, for its part, has just unlocked a billion euros to support the Ukrainian military industry, from frozen Russian assets. A strong signal that could accentuate the pressure on Moscow.
In this context, the markets will have to closely follow the monetary and financial adjustments made by Russia, because the economic weakening of the Kremlin could have unexpected repercussions on the crypto sphere, especially in terms of cross -border flows and mechanisms of avoidance of sanctions.
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