extract from the article: Beyond Trump - What can peace in Ukraine look like and what was on Putin’s mind when he started the war?
Even though it has suffered heavy human and material losses, Russia is prospering from the war in Ukraine. Those who bet on Russia’s bankruptcy in a war it cannot afford have misjudged the situation.
In the first year of the war, economic sanctions were completely ineffective. The EU has blocked some imports for a wide range of products, but has remained dependent on Russian gas. Even if quantities have been reduced in this segment as well, Russia has imposed price increases and made even higher profits than before the war. Thus, 2022 was the most successful year for Russia’s international trade. Only after that did the situation deteriorate to almost the level of 2016, but the trade balance remains positive.
At the same time, the war economy allowed the Russian leader to force the ruble rate and consumer prices, on the one hand, and stimulated, through state orders, industry and employment. The monetary buffer that allowed him to do this was the surplus economic balance of the last decades, which came mostly from hydrocarbons. From these reserves, Russia launches military orders, supports financial incentives and controls the evolution of consumer prices.
As for the real dynamics of the domestic economy, the data provided by Russia cannot be regarded as objective. Apparently, Russia’s GDP has increased compared to the pre-war period, and 8% of it comes from war orders. Unemployment has fallen to 1%, but this is as a technical indicator. It would actually be a labor shortage given that the number of unfilled jobs exceeds one million people. As a result, Russia, at least officially, has a prosperous economy, stimulated by the war, and an economic growth of at least 3%, coming from consumption (which in turn is stimulated by the elimination of unemployment). In the long term, the situation will probably be different, but at the moment the war is a particularly profitable undertaking for Putin.
see also: Deutsche Welle analysis (video) on the scenarios for peace in Ukraine, including the so-called Putin-Trump agrement
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