Emigration, low salaries, inhibition of GDP growth: how the Russian economy is affected by war in Ukraine

In the US, the war in Ukraine creates a "significant burden" on Russia's economy, if not aggression, GDP would be 5% larger. The US Department of Finance assessed the state of the Russian economy and noted that growth is misleading. GDP increases, but this does not improve the lives of citizens. This is stated in Financial Times with reference to the Ministry report.

If the Kremlin head Vladimir Putin did not start the war in Ukraine, the gross domestic product of the Russian Federation would be 5% more. In the Ministry's report, the Chief Economist of the Ministry of Sanction Rachel Lingaas noted that the Russian economy is tolerated the strong pressure of war and sanctions.

Full -scale invasion of Ukraine and the occupation of its territories contributed to the rapid growth of costs, depreciation of the ruble, the growth of inflation and tensions in the labor market due to the reduction of labor resources. Therefore, Russia loses significantly in front of other energy exporting countries. The US Treasury notes that Putin boasts the so -called growth of the Russian economy and low unemployment.

However, this is due to the military-industrial complex that absorbs economic resources and distorts the real state of the economy. According to the US Ministry, military products are taken into account in GDP, but does not affect the standard of living in Russia. The increase in wages is also generally explained by the social benefits related to the war and high salaries in the defense industry.

At the same time, real salaries in Russia still remain lower than they were the illegal occupation of Ukrainian Crimea in 2014. According to the US Ministry of Finance, emigration in Russia reached historical maxima: in 2022, 668 thousand people left the country. "The loss of human capital will further weaken the potential of the Russian economy," Lingaas writes.