After four-and-a-half years of conflict, Russia's economy has developed into a two-tier system, where those employed in military production thrive, while others face economic challenges. Recent drone attacks by Ukraine on Russian oil facilities have highlighted vulnerabilities in Russia's wartime economy.
Despite a reported GDP growth of 1.3% year-on-year in the second quarter of 2026, analysts like Alex Kolyandr from Eurasia Group caution that this growth masks deeper issues, including reliance on military spending and rising inflation. Charles Lichfield from the Atlantic Council notes that Russia's budget deficit is expected to double by 2025, exacerbated by declining energy revenues.
The impact of Western sanctions and ongoing drone strikes on oil infrastructure further complicate the economic landscape. Consumer behavior is shifting, with Russians opting for cheaper food options, indicating economic strain.
Experts, including Elina Ribakova from the Peterson Institute, believe that unless oil prices plummet significantly, economic factors alone are unlikely to compel Russia to end the war, as Putin remains committed to his military objectives