{"id":740024,"date":"2026-07-03T02:00:11","date_gmt":"2026-07-03T02:00:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/740024\/"},"modified":"2026-07-03T02:00:11","modified_gmt":"2026-07-03T02:00:11","slug":"russias-economy-is-sputtering-and-putins-wartime-spending-model-has-pushed-the-country-to-an-economic-political-and-military-abyss","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/740024\/","title":{"rendered":"Russia\u2019s economy is \u2018sputtering,\u2019 and Putin\u2019s wartime spending model has pushed the country to an \u2018economic, political, and military abyss\u2019"},"content":{"rendered":"\n

For years, Vladimir Putin has had a convincing rebuttal to anyone who thought Western sanctions would bring his country to its knees. In the four years since Russia invaded Ukraine, GDP has stayed mostly in the green<\/a>, its unemployment rate has declined<\/a>, and average wages have skyrocketed<\/a>. Even inflation has moderated<\/a> sharply, after soaring to double digits<\/a> in 2023. <\/p>\n

Putin has waved those figures at Western critics as proof that sanctions have failed to cripple Russia’s booming wartime economy. China, one of Russia’s few remaining major trading partners, has even studied Putin’s model<\/a> as a blueprint for sanctions-proofing its own economy, in the event Beijing’s stance towards Taiwan turns aggressive enough to trigger Western penalties of its own. But Putin’s success story is starting to show cracks.\u00a0 <\/p>\n

Russia’s economy has become dominated by the war effort, with the country’s industrial and technological base increasingly dedicated to serving needs on the front lines. But now, with the Russian army running into a standstill in Ukraine and military costs mounting, Putin’s economy stands at a crossroads, according to a research brief<\/a> published Wednesday by the Center for Strategic and International Studies, a think tank in Washington D.C.\u00a0 <\/p>\n

Russia is still able to count on a vast pool of human labor and its “shadow fleet” array of oil tankers evading sanctions to bring in revenue from fuel sales, according to the researchers. But the costs of maintaining the status quo are mounting for Putin, as the wartime economy he built grows increasingly strained. <\/p>\n

“Everyday Russians are suffering from a sputtering economy,” the CSIS researchers wrote. “Russia’s economy is in distress, and Russia’s wartime spending may be increasingly untenable. The moment is ripe for a pressure campaign that pushes the Russian economy toward exhaustion.” <\/p>\n

Russia’s steroid economy is wearing off <\/p>\n

The report first compiled the numbers detailing Russia’s battlefield losses. Since the war began, as many as 450,000 Russians have died and 1.4 million have been injured, a pace of loss that now likely exceeds Russia’s monthly recruitment, and has recently come with negligible benefits. After advancing deeper into Ukraine last year<\/a>, Russian forces have moved at rates as slow as 50 to 90 meters a day in 2026, a pace that ranks among the slowest advancements of any war in the past century. (During World War II, offensives such as the Soviet Union’s incursion towards Leningrad or Kursk yielded advancements of several kilometers a day<\/a>. During World War I, the Battle of the Somme fought in northern France\u2014often considered one of recent military history’s deadliest conflicts<\/a>\u2014saw offensives moving around 80 meters a day on average). <\/p>\n

Story Continues <\/p>\n

Over the past few months, Russia’s territorial holdings in Ukraine actually shrank for the first time since August 2024, according to CSIS. Another report<\/a>, released in May by the Institute for the Study of War, determined Russia had lost control of 116 square kilometers in April alone, and that its military’s rate of advancement had been shrinking since November 2025.\u00a0 <\/p>\n

Russia’s military losses have mainly come down to Ukraine’s improving abilities to strike deep behind front lines, as well as Russia’s own faltering military machine, two factors with direct repercussions on the Russian economy at large.\u00a0 <\/p>\n

Russia’s war effort and its society have more or less relied on the same well of state cash in the past four years. GDP growth has largely come down to explosive state financing for Russia’s manufacturing sector that has supported the military. Between 2022 and 2024, public cash injections exceeded 10%of GDP, according to a study<\/a> published last year by the Institute of Economics and Peace, an Australian think tank. In addition to manufacturing and other sectors tied to defense, these funds have propped up demand through pensions and cash payments to soldiers and their families.\u00a0 <\/p>\n

Analysts have termed Russia’s strategy a form of “military Keynesianism<\/a>,” a reference to the famed economist’s theory that emphasizes the role of governments stepping in to fix economic problems. In Russia’s case, the state has intervened in a big way, and its answer to the problem of being a country at war and burdened by sanctions has been to invest massively in militarizing its economy and extending financial support to the hundreds of thousands of households impacted by the war. <\/p>\n

Running on fumes <\/p>\n

But after more than four years of war, that well is running dry. Russia’s fiscal reserves are dwindling<\/a>, and oil and gas revenues have cratered<\/a> as many countries rerouted to alternative suppliers. An uptick earlier this year due to the conflict in the Middle East proved temporary, as oil prices have since normalized in part because of softening demand, while Russia’s energy output in general has also declined due to more frequent Ukrainian drone strikes targeting oil and gas infrastructure.\u00a0 <\/p>\n

A report<\/a> published last year by Bruegel, a think tank in Belgium, estimated Russia’s GDP growth to have plummeted to around 0.6% in 2025, after its economy expanded more than 4% in 2023 and 2024. Another study<\/a>, by the Oxford Institute for Energy Studies, found that in 2025 the share of oil and gas receipts in Russia’s federal budget revenue had fallen to 23%, the lowest percentage share in two decades. To make up the difference, Russia is likely turning to more expansive taxation policies, including a recent move to raise the country’s value added tax from 20% to 22%, a decision that has not gone down well<\/a> with most Russians. <\/p>\n

Neither the economic clouds or battlefield shortcomings have been enough to stop Putin and the Russian military. Just this week, Russia launched one of its largest attacks on civilian infrastructure in Ukraine yet, an 11-hour barrage of missiles and drones<\/a> raining over Kiev that killed at least 20.\u00a0 <\/p>\n

But with Putin’s economy increasingly backed into a corner, the CSIS report argued the U.S. and Europe should seize the opportunity by expanding the West’s sanctions regime, primarily by addressing the gaps that have allowed hundreds of chartered ships to sell unmarked Russian oil.\u00a0 <\/p>\n

“Despite Russia’s battlefield challenges and economic vulnerabilities, the United States and Europe have failed to fully wield economic or military pressure,” the authors wrote. “Without greater costs in blood and treasure, Putin is likely to keep fighting\u2014even as he pushes his country toward an economic, political, and military abyss.” <\/p>\n

This story was originally featured on Fortune.com<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"For years, Vladimir Putin has had a convincing rebuttal to anyone who thought Western sanctions would bring his…\n","protected":false},"author":2,"featured_media":740025,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,101,258695,120983,6508,95458,95460],"class_list":["post-740024","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-russia-invaded-ukraine","tag-russias-economy","tag-vladimir-putin","tag-wartime-economy","tag-western-sanctions"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/740024","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=740024"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/740024\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/740025"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=740024"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=740024"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=740024"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}