Russia's Economy in Year Five of War: Reserves Nearly Exhausted, Spending Hits 6 Trillion Rubles.

Russia's Economic Struggles in the Fifth Year of War

According to UATV: Five years into its war against Ukraine, Russia's economy is facing severe strain. The country's fiscal reserves are almost depleted, while military expenditures have surged to an unprecedented 6 trillion rubles. These indicators highlight the deepening economic challenges Moscow confronts as the conflict drags on.

Liquid assets in the National Welfare Fund have dropped from 6.5% to just 1.8% of gross domestic product. These findings come from a study by the Kiel Institute for the World Economy and the Stockholm Institute of Transition Economics. Russia's federal budget deficit for the first three months of 2026 has already exceeded planned levels, signaling growing financial pressure.

Energy Sector Woes

Oil and gas revenues in the first quarter of 2026 fell by 45% compared to the same period last year, further underscoring the troubles in the energy sector. Military spending now accounts for 46% of all federal budget outlays and roughly 2.5% of projected annual GDP.

As Janis Kluge notes: 'Russia has already begun spending half of its state budget on the war against Ukraine.'

This indicates that the country's resources are overwhelmingly channeled toward military objectives, which could have serious repercussions for social programs and economic initiatives.

As a result, Russia is struggling to finance its obligations and maintain economic stability amid soaring military costs and declining revenues. This situation raises concerns about the nation's future, given both internal and external pressures.

The case of Russia illustrates how armed conflicts can undermine a state's economic stability. With military expenditures exceeding half of the national budget, social programs and infrastructure projects are likely to suffer. As energy sector income continues to shrink, the country may face a stark choice between prolonging hostilities and addressing the socio-economic needs of its population.