Natalia Forrat

I sense a bit of triumphalism about assessing the state of the Russian economy recently. So I believe a short Q&A, easily accessible to readers, is warranted. Is the Russian economy in crisis? Yes. Is the crisis passing or structural? It's structural and it won't get better until the war economy is dismantled and sanctions lifted. What is the nature of the crisis in question? Russia has entered the period of cessation of growth, coupled with rising inflation, lack of foreign investment, labor shortages and rising private/corporate debt. Parts of the private sector may collapse under pressure. Will this crisis stop the war effort? In the medium-term, no. The war would probably be over before the economic crisis stops it. Who will the crisis hurt the most, the state or the people? Primarily the people and social services provided by the state. Russia will not cut military expenditure, it will cut social expenditure instead. Won't this crisis and cutting social services expenditure cause dissent among the population? It should, yes. But dissatisfaction doesn't translate directly into action, meaning protests or organized resistance. There is no organized resistance in Russia on a national level. Certain social protests on a local level will be possible. Not enough to destabilize the regime. With a caveat that nobody can predict black swan events, which may change the equation. If the economic crisis won't stop the war and won't cause a popular uprising, is it unimportant? No. The crisis will shape the social and political landscape in Russia strategically. Meaning it's impacts will be seen in the future and the future political class will have to take these into account. In short-term, we will continue to observe negative indicators, the rising hardship of the private sector, take screenshots of the weakened ruble, but the war will continue as it did.