Russian Economy Is Expected To Stagnate With Gradual Degradation

The effect of military spending is over.

It is extremely unscientific to try to build models at two or three points. Sanctions are a factor postponed due to the inertia of the economy, especially as large as the Russian one. It takes longer to assess the impact of sanctions.

The second point is that the current indicators of the economy are significantly affected by a sharp increase in military spending. Due to the hidden nature of statistics, it cannot be estimated, although there are some indirect indicators – for example, the production of metals. Nevertheless, this factor has ceased to influence for about six months. Economic growth has become a flat horizontal line on the chart since the end of summer 2023. This suggests that the effect of military spending is over. The problem is that in addition to them, there is the last reserve – the liquid part of the national welfare fund (this is very little – about 4-5 trillion rubles). After its exhaustion, the only source of support (not growth, but rather maintenance) of the economy will be devaluation and inflation. Most likely, this awaits us around the end of this year or the beginning of next year.

That is when it will be possible to start developing a more or less reliable model of the impact of sanctions. The economy consumes the remnants of the sustainability resource and mainly its unexpendable stocks.

Of course, no "torn to shreds" economy is expected in this model. But stagnation with gradual degradation (and with an accelerating trend) is for sure. The only question is the pace. Then sanctions plus military actions will exert the influence.

Ukraine is systematically (and apparently, not without external clues) moving to an infrastructure war, attacking the largest Russian enterprises of basic industries. At the same time, strikes are inflicted on the most vulnerable places of these enterprises, which again indicates a very high professional level of planning. It is unlikely that this is only the work of the Ukrainian sabotage centers – for sure they are advised by experienced and intelligent people "from outside".

In general, the well-known slogan "We have not yet begun" best describes the situation. It is too early to sum up the interim results now, and even more so to bang timpani. However, the picture will become much more distinct in a year and a half.

El-Murid, Telegram