Former WTO Chief Identifies Key Reason Behind Russia's Collapsing Economy.

Russia's Economic Downturn

According to Espreso.tv: Pascal Lamy, the former Director-General of the World Trade Organization, has shared his assessment of the troubling trends plaguing the Russian economy. He attributes these developments primarily to the ongoing war with Ukraine. According to Lamy, the situation in Ukraine has strengthened the country while simultaneously weakening Russia, a dynamic he expects to persist.

Recent economic data points to severe difficulties for Russia. Since the start of 2026, the country has lost at least $7 billion due to strikes on its oil refining infrastructure. This has triggered a fuel shortage that now affects not only Moscow and St. Petersburg but also occupied territories. Meanwhile, Russia's budget deficit for the first four months of 2026 has reached 5.9 trillion rubles.

Military Spending and Economic Strains

On June 18, 2026, the Russian government was forced to increase war-related spending by 40% above its planned budget. This highlights how military expenditures have become a major burden on the nation's economy. Despite these challenges, on June 23, 2026, Russia managed to boost its pipeline oil exports by 22%, thanks to shipments to Slovakia and Hungary.

Lamy noted that the Central Bank of the Russian Federation, led by Elvira Nabiullina, has responded to these challenges 'in a Russian way,' suggesting that the measures taken to stabilize the economy may be insufficiently effective.

As the war continues and economic pressure mounts, Russia faces serious challenges that could have long-term consequences for its stability. Declining oil revenues, rising military costs, and a growing budget deficit all point to a worsening economic outlook. While increased oil exports to Slovakia and Hungary may indicate efforts to find new markets, these gains are unlikely to offset losses from closed traditional markets. The prospects for Russia's economic development remain uncertain as the conflict in Ukraine drags on.