The Russian economy has fallen into stagnation: why the war is still cheaper for the Russian Federation.

The Cost of War for Russia and Ukraine

According to ТСН: Currently, the war costs Russia less than it costs Ukraine, since the fighting is taking place on Ukrainian territory, leading to the destruction of infrastructure and human losses. Russia spends about 7% of its GDP on the war, while Ukraine spends nearly 30%.

This information was announced by Doctor of Economic Sciences, head of Advanter Group Andriy Dligach on air.

“We need to defeat the enemy not only on the battlefield and in diplomacy but also in the economy. The question is whether we can make the war more expensive for Russia and whether there are real changes happening there that will deprive it of the ability to fight in the near future,” the expert emphasized.

The State of the Russian Economy

According to Dligach, the old model of the Russian economy has basically exhausted itself this year. The liquid part of Russia's National Welfare Fund decreased from about 8 trillion rubles at the beginning of the year to less than 4 trillion in the middle of the year. Due to the budget deficit, Russia has resorted to mass money printing.

“This year, Russia will print about 8 trillion rubles. This indicates that the current economic model no longer works. The so-called strengthening of the ruble is an illustration of the separation of the Russian economy from the dollar and the euro and its dependence on the yuan,” he explained.

The economist also noted sharp changes in the structure of Russian exports. Dligach emphasized that Russia has effectively stopped earning from energy resources, as the price of Urals oil has fallen to 32 dollars per barrel, which is below the average cost of extraction.

“The Russian economy has been in stagnation for four consecutive quarters. Industrial production is declining, construction is falling by 8–20%, the chemical industry by up to 30%, and machine engineering by about 15%. Even the military-industrial complex is no longer saving the situation,” Dligach concluded.

Earlier, the head of the Main Intelligence Directorate Kyrylo Budanov noted that Russia's economic difficulties would not affect the situation on the battlefield, but could have consequences for the Kremlin's position on ending the war.

It has also been reported that the Russian economy is currently capable of sustaining the war, but its destruction could occur by 2026.

Serious concerns are emerging in the economic situation of Russia, which could affect its ability to wage war in the long term. This is a relevant issue not only for analysts but also for every Ukrainian, as the opponent's economic stability determines the outcome of the conflict.