Tax increases and warnings of a recession: the war industry keeps Russia up to date, but many other areas are weakening. An overview.
The warning signs for the Russian economy are becoming more. Even high -ranking government members warn of a significant decline in growth figures. Now the cabinet must also ask the people to checkout with a surprising increase in VAT, to cover the enormous spending on the war.
US President Donald Trump recently described Russia as “paper tiger” that the economy was in a terrible condition “. Does the country really threaten a crisis?
Which industries are currently crushing?
There are obvious problems in many civilian areas. “A difficult situation in individual sectors,” said the Russian central bank boss Elvira Nabiullina a week ago and, as examples, led the oil production industry as well as coal and steel. In addition, the car manufacturers also complain about falling sales figures.
Since the elimination of state -based mortgage loans, housing has been in the housing. And now the pressure on retail is increasing due to a tax increase.
How high should growth be?
The European Bank for Reconstruction and Development lowered its growth forecast for Russia and only expects a 1.3 percent higher economic output for this year. At the same time, this expectation is still above the figures for Germany or the euro area, which must expect less than one percent economic growth.
The Russian Ministry of Finance lowered its growth forecast for 2025 from 2.5 percent to 1.5 percent. Sberbank boss German Gref had even warned of a crisis: If the central bank does not drastically reduce interest rates, the country would get into a recession.
How does the Russian government react?
VAT should increase from 20 to 22 percent at the turn of the year. Even more: Now smaller companies with a turnover of more than ten million rubles (a good 100,000 euros) should pay this tax – so far the limit was six times.
On the one hand, the raising comes unexpectedly: In 2024, Kremlin boss Vladimir Putin had promised not to feel the taxes by 2030. On the other hand, the step has been in charge of the huge budget deficit for a long time than inevitable – it is 43 billion euros by August alone.
The Ministry of Finance writes the money, for example, to finance defense and security. In other words: for further warfare.
How is the war of Russia burdened?
The war against Ukraine confused the price structure. Many companies outside the armaments industry also have to pay high wages due to skilled workers in the course of the military mobilization campaign to keep their employees or win new ones.
In addition, there is the cost of warfare. They are difficult to quantify: But the budget expenses for the positions of defense and internal security alone are 135 billion euros this year – around 40 percent of total expenses.
Not included here are the long -term costs of the sanctions that are expressed in technological deficit due to the import restrictions, and the war damage. Because even the Russian areas close to the border and further in the hinterland, especially the oil industry suffer from the attacks with which Ukraine leads its defensive fight.
How difficult is it the Russian oil industry?
Russia’s oil industry has been suffering from sanctions for some time. Moscow is forced to sell the raw material with a discount on the world market. India and China in particular are still growing here.
In the meantime, however, the effect of the Ukrainian drone attacks is also evident. In the European part of Russia, dozens of refineries were attacked, some of them had to stop operating for months. The Russian government has now also admitted the crisis.
Vice control chief Alexander Nowak has extended the export ban from petrol and diesel by the end of the year because there is a lack of fuel in the country itself. Moscow governor on the Crimea, Sergej Aksjonov, annexed by Russia, was forced to calm down the residents in a video. The situation will relax in two weeks, he promised.
What is behind the Paper tiger statement Trumps?
Russia is weak and after three and a half years of war without real successes like a paper tiger, Trump wrote on his Truth Social platform. After a meeting with the Ukrainian President Wolodymyr Selenskyj, he was even convinced that Kiev “with the support of the European Union is able to regain the entire Ukraine in its original form”. Vladimir Putin and Russia were in great economic difficulties, he wrote.
Trump thus changed his otherwise positive tone towards Moscow. Should rhetoric be reflected in new sanctions against Russia’s economy or greater military support for Ukraine, it would actually be a difficult blow for Russia. Russia’s war treasury would continue to add additional pressure on the oil and gas sector. However, whether Trump will actually act is still completely uncertain.
What happens when Russia ends the war?
An end of the war would alleviate the sanction pressure and lead to the end of the Ukrainian attacks on the Russian oil industry. At the same time, in view of the problems in civil sectors, the armaments industry is the industry that still receives economic growth in life.
The sector is responsible for eight percent of gross domestic product. A turning back to a peace industry would mean a massive break -in. It is also unclear what should happen to the returnees from the front. There is a risk of an increase in unemployment.