“ISW also predicts that Russia’s defense-industrial complex is unlikely to be able to provide the production rates necessary to compensate for the loss of weapons”, — write: www.radiosvoboda.org
“The Kremlin’s latest economic policies indicate that the Russian economy is likely to face significant challenges in 2025, and that Russian President Vladimir Putin is concerned about Russia’s long-term economic stability,” the text said.
The institute points to recent moves by the Kremlin to cut payments to wounded soldiers, fight inflation and address long-term demographic problems such as low birth rates and labor shortages.
“This policy demonstrates that the Russian economy is not as resistant to Western sanctions, monetary restrictions and the cost of military operations as the Russian government is trying to show. This policy also demonstrates that the Kremlin will not be able to sustain a protracted war for years and decades while protecting Russian society from economic problems. Consistent Western and international support for Ukrainian resistance on the battlefield will further exacerbate Russia’s economic problems,” analysts believe.
Read also: Three ways to bypass the dollar – analysts on why BRICS did not become a breakthrough
In particular, ISW reminds that the President of Russia, Vladimir Putin, has reduced compensation to Russian servicemen for injuries sustained in the war against Ukraine. If earlier payments of 3 million rubles (about 30.3 thousand dollars) were provided for any injury, now only for serious ones.
In addition, ISW predicts that the Russian defense industrial complex is unlikely to be able to provide the production rates necessary to compensate for the loss of Russian weapons, given the recent changes in the monetary policy of the Russian Federation.
In particular, the report cites a message from the Russian Telegram channel, according to which the policy of the Central Bank of the Russian Federation limits the long-term pace of development of the country’s military industry. At the same time, so far it has not directly affected the provision of the war against Ukraine.
The institution also refers to a report by Foreign Policy with data from OSINT analysts, according to which Russia loses about 320 barrels of tanks and artillery guns per month, but can produce only 20. Also, Russian industry can ensure the production of about 17 infantry fighting vehicles per month, but the Russian army loses an average of 155 BMP during this period.
Read also: The State Duma of Russia obliged volunteers to compensate for lost military equipment
Meanwhile, Ukrainian intelligence, analysts note, also suggests that high interest rates in Russia could create a shock and decline in production, which could lead to bankruptcies and defaults of companies.
“The FP estimates that the Central Bank’s policy of raising interest rates has made it difficult for non-defense companies to raise capital through loans, which is shrinking the civilian economy and could lead to a significant post-war recession as returning Russian veterans find it harder to find work,” the Institute quotes.
In October, the World Bank predicted that Russia’s economic growth is expected to slow from 3.6% in 2023 to 3.2% this year and 1.6% as a result of tighter monetary policy and “increasing constraints on production capacity and labor resources.” – the next one.
On October 25, the Russian Central Bank raised the key rate to the maximum level in 20 years – up to 21%. The last time the rate was at this level was in 2003.