The Russian Economy: A Look Two Years after the Ukraine Conflict began

Western sanctions were imposed with the goal of crippling the Russian economy and diminishing Moscow’s ability to continue the conflict in Ukraine. Despite this, the impact of the sanctions has been mixed as Russia continues to fight and its economy remains stable. However, analysts believe that the sanctions will eventually have the desired effect, though it may take more time for the full impact to be felt, potentially prolonging the conflict.

Wars come with significant financial costs. Governments must channel funds into manufacturing military equipment, diverting resources away from civilian production and leading to inflation. The conscription of able-bodied men results in labor shortages, often filled by less qualified individuals such as mothers, retirees, or those unable to secure regular employment. Additionally, a focus on military production can reduce export earnings, resulting in increased government spending and decreased revenue. As a result, most countries end up financing wars through a substantial increase in government debt.