Russia's Military Spending Fuels Economic Growth, But Sustainability Remains Uncertain
• Russia's economy grew rapidly in 2023 due to increased military spending, reaching near pre-war levels • Growth was higher than expected and exceeded most forecasts, largely fueled by oil/gas revenue • Inflation has risen to 7.5% and signs point to an overheated economy at risk of slowdown or recession • Labor and skills shortages, as well as high interest rates, threaten sustainable long-term development • Prolonged focus on the war effort hampers progress on human capital issues like education and healthcare