Russia's wartime economy is still growing, but analysts say the headline data mask deeper strain. Civilians appear to be feeling the squeeze, with households trading down to cheaper and store-brand foods as real incomes come under pressure.
Analysts do not expect economic stress alone to end the war in Ukraine. Some warn worsening conditions could instead incentivize President Vladimir Putin to escalate it.
Russia has become a two-tier economy, and while it is growing slowly, this masks problems such as the Kremlin's reliance on military spending, higher taxes, and subsidized bank lending.
Two standout metrics for Russia's economy
For the first time since 2023, Russia's economy returned to growth in the April to June period. The country's gross domestic product grew 1.3% year-on-year in the second quarter, while GDP expanded by 0.6% through the first half of the year. However, analysts highlight that the deficit and inflation are more critical metrics.
What Russians' cookie buying says about the economy
Earlier in the year, the country's largest retailer said citizens were increasingly switching to low-cost and store-brand food products.
The Russian government could try to increase taxes on oil and gas companies or borrow money internationally.
Russia's economy unlikely to determine Ukraine war
Analysts believe that Russia's economy is unlikely to force it to end the war, especially when oil prices are rising.
