Russia economy meltdown as Putin accused of hiding impact of the war | World | News
Vladimir Putin has been accused of hiding the true impact of the Ukraine war on Russia’s economy as inflation continues to be a critical issue.
The Kremlin is conducting an “information campaign” to paint an overly positive picture of the war economy to domestic and international audiences, the Institute for the Study of War (ISW) said.
Russian Prime Minister Mikhail Mishustin recently told Putin that Russia‘s GDP increased by 4.1% last year due to “intensive” growth in the manufacturing sector. This was likely a reference to the growing defence industry since the start of the war.
He added that inflation hit 9.52% in 2024, while Putin admitted it had reached 9.9% mere days prior to their meeting.
However, ISW analyists claimed this number is a significant underestimation, deliberately published to conceal the real, much higher inflation rate.
They wrote: “Russia‘s true inflation is quite higher than the official statistics the Kremlin is willing to publicise, however. Several studies indicate that Russia’s inflation rate is closer to 20%.”
The report also said the prime minister was preparing Russians for “economic hardships” this year by pointing out the significant labour shortage.
It added: “Mishustin noted that Russian economic growth might be less significant in 2025 as it is very important to stop inflation and ensure long-term economic growth – likely a signal to prepare the Russian population to expect economic hardships in 2025.
“Mishustin and Putin also attempted to posture Russia‘s economy as stable in the face of international economic pressure. Mishustin claimed that Russia‘s fuel and energy complex is adapting and finding new markets.”
Mishustin also claimed that Russia has “successfully” dealt with “unprecedented sanctions pressure” since the start of the nearly three-year-long war in Ukraine.
He boldly asserted that Western economic sanctions are causing more harm to the countries imposing them than to Russia, with Putin echoing this and claiming his economy is growing faster than Western ones.
However, the ISW pointed out sky-high interest rates and the draining of the National Welfare Fund to keep the war machine going.
Its report read: “Mishustin and Putin notably did not mention how the Russian Central Bank raised the interest rate to 21% in October 2024 or how Russia has been drawing from its National Welfare Fund to finance its war effort over the last three years.
“The liquidity portion of Russia’s National Welfare fund may run out by fall 2025.”
