Russia's War Economy Falters: Expert Predicts Recession

Russia's War Economy Stalls: Expert Warns of Economic Deadlock MOSCOW, May 30, 2025 — Russia's war economy, which has relied heavily on military spending for years, is showing signs of strain, according to a recent analysis. For years, a third of the nation's state budget has been funneled into the arms industry, a strategy that initially fueled economic growth. However, this approach is now facing significant headwinds. Janis Kluge, an economist at the Stiftung Wissenschaft und Politik, points to falling oil prices and a severe shortage of personnel as key factors contributing to the economic slowdown. "The war is not initially bad for the economy because it means the state is spending a lot of money," Kluge explains. "But this is now leading to a cooling-off period after two years of economic boom." The high demand for military personnel has driven up wages, while interest rates have soared to over 20%, further exacerbating the economic challenges. Kluge warns that Russia may even slip into recession this year. This situation presents a significant challenge for President Vladimir Putin and his administration. While the economic downturn isn't necessarily a full-blown crisis, it represents a significant shift from the previous years of growth, fueled by the war economy.