Russian War Economy Faces Slowdown Despite Resilience

Since 2022, the Russian economy has surprised many with its resilience under Western sanctions. Growth was fueled by wartime spending and high energy revenues. Now, signs suggest this “war bump” is fading. In a recent Financial Times interview, Elina Ribakova explains why the Russian war economy faces serious challenges ahead. Elina Ribakova is vice-president for foreign policy at the Kyiv School of Economics. She spoke with Sam Fleming, economics editor at the Financial Times.

Sanctions and Short-Term Resilience

When Western nations imposed sanctions on Russia, many expected a collapse. Instead, wartime spending and high oil revenues propped up growth. Ribakova notes that Russia’s ability to redirect resources into military production created a temporary boom. But this resilience came at the cost of long-term growth in the Russian war economy.

Why the Russian War Economy Is Slowing

Russia is now hitting hard limits. Labor shortages, soaring inflation, and overstretched industrial capacity are beginning to bite. Ribakova points out that unemployment has fallen to unsustainably low levels, while non-military sectors are stagnating. Even the defense industry, once booming, is showing signs of strain across the Russian war economy.

China’s Critical Role

One reason Russia has endured sanctions is its growing reliance on China. Ribakova highlights how Chinese exports—from consumer goods to vital military components—have allowed Moscow to sustain its war economy. Yet this partnership is highly lopsided: for China, Russia is a marginal partner; for Russia, China is a lifeline.

The Postwar Challenge

Looking ahead, Ribakova warns that ending the war will not mean an easy recovery. Russia faces deep demographic challenges, heavy reliance on military production, and decades of failed economic diversification. Rebuilding a sustainable postwar economy may prove “devastatingly hard” for the Russian war economy.

Listen to the Original Interview

The slowdown of the Russian war economy is more than an economic story; it shapes global energy markets, security, and geopolitics. To hear the full conversation and Ribakova’s detailed analysis, listen to the original Financial Times interview here.

Learn More About the Russian War Economy and Sanctions

To learn more about Western sanctions and Russia’s countermeasures, visit the Sanctions Timeline. And for details on sanctions imposed on Russia and their effects, see the Evidence Base section of the sanctions portal. Explore more policy briefs on sanctioning Russia here.