13 Jun 2025, 17:17

Decline of Russia's Economy Due to Sanctions and Energy Dependence

Russia's economy is experiencing a downturn due to falling oil prices and rising military expenditures.
Dependence on energy revenues critically affects the state budget, despite new taxes.
International sanctions and political decisions from the U.S. create uncertainty for the future of Russia's economy.

This is reported by Forbes, Asharq Al-Awsat.

Economic Problems in Russia

The Russian economy, which had shown growth for a long time, is now facing challenges. After three years of stable development, economic indicators have begun to deteriorate due to falling oil prices and the threat of new Western sanctions. State spending on military needs has significantly increased, but other sectors of the economy are showing negative results.

Military Expenditures and Their Consequences

Spending on weapons and military equipment has increased by 60% since the start of military actions in Ukraine, accounting for 9% of GDP. However, most other sectors of the economy are not showing any growth. Economic growth in the first quarter of 2025 has dropped to 1.4%, the lowest figure in two years.

Energy Dependence and Its Impact

Russia's dependence on oil and gas revenues remains critically important. In May, the average price of Urals crude oil fell to $52 per barrel, which significantly impacted state revenues. Although the government is introducing new taxes, they do not cover the deficit arising from reduced oil income.

Sanctions and International Reaction

Ukrainian President Volodymyr Zelensky is calling on the U.S. to impose new sanctions against Russia due to the continuation of military actions. At the same time, U.S. President Donald Trump is considering both the introduction of new sanctions and the lifting of some existing ones. This creates uncertainty regarding future actions.

Prospects for the Situation

According to analysts, Russia has the financial resources to continue military actions for a few more years, but there is a threat of cuts in other areas. The Russian economy, which is already showing signs of fatigue, needs urgent changes for stabilization.