The Russian economy is entering a multi-year stagnation that, while enabling the Kremlin to sustain the war effort over the next 12 months, will steadily erode the fiscal, industrial and technological foundations required to keep fighting at current intensity beyond 2026. On Oct. 7, the World Bank released its ''Fall 2025 Economic Update,'' which projects that Russian real GDP growth will decline from 4.3% in 2024 to 0.9% this year, 0.8% in 2026 and just 1% in 2027. The report describes a war-distorted economy in which tight monetary policy, shrinking private credit and labor shortages have stalled civilian production and only defense orders keep output artificially afloat. The Russian economy's non-defense activity has contracted, consumption has slowed and investment has fallen under high borrowing costs. With military spending at a record high and a drop of 17% in oil revenues, the federal budget deficit grew to 1.7% of GDP in...
