Minister for Finance in talks about latest report on Russia’s economy

The war industry is a major component of Russia’s economy, and military expenditures have been clearly prioritised over other public expenditures and investments in more productive sectors. This will impact Russia’s prosperity. 

SITE’s new report indicates that oil revenues, Russia’s most important source of income, have decreased dramatically in early 2025. Oil exports via the Russian shadow fleet have decreased tangibly, which shows that EU and G7 sanctions are having an impact. Since 2022, Russia has made substantial withdrawals from its sovereign wealth fund, and the liquid share of the fund is now equivalent to less than 3 per cent of GDP. At the same time, Russia continues to reinforce the narrative that time is on its side. 

Russia’s economic situation is becoming extremely difficult, with both revenues and reserves decreasing, and very limited access to borrowing in international markets. Time is clearly not on Russia’s side. 

The report also indicates that Russia is attempting to conceal the actual costs of the war in its official statistics by instructing private banks to issue favourable loans to the war industry. The Russian banking sector has seen increased credit expansion that can be linked to the war industry. 

“It’s important that we continue to clearly show that Russia’s economy is not as strong as Putin asserts. Russia is spreading economic propaganda with the aim of portraying the sanctions as ineffective and thereby undermining long-term support for Ukraine. We need to do everything we can to starve Russia’s war chest through additional and tougher sanctions,” says Ms Svantesson. 

Challenges remain in analysing the Russian economy due to a lack of reliable data. This is the result of Russia distorting its economic reporting for war propaganda and its Government no longer publishing major portions of data that were previously available.

“Much of Russia’s economic data is now either strictly controlled or simply not published at all. Attempting to pin down actual figures for inflation or debt is like putting together a puzzle without all the pieces. However, it is clear that macroeconomic and financial imbalances have grown in Russia since last year,” says Mr Becker.