Russia's economy is becoming more fragile due to Western sanctions and transition to the country's military-economic regime due to the Ukrainian war. This is stated in the report of the Stockholm Institute for Transitional Economic Institute (SITE) prepared for the Finance Ministers of the European Union. The report states the superficial stability of the economy by military budget stimulates, but it is carried out closed, non-transparent mechanisms, distributed financial reserves, which makes it unstable in the long run.
The economic statistics published by Russia, including the data of GDP and inflation, have been particularly questioned. The report states that if inflation is really 9-10%, the main interest rate on the Central Bank is not logical. "This clearly indicates that real inflation is much higher, and the growth of real GDP is exaggerated," said Economist Thorbjorn Becker.
Becker also noted that Russia's budget deficit is actually twice as many as 2%. Most of the military spending is directed by the banking system, which increases the financial risks and can lead to a bankruptcy. European Commissioner Valdis Dombrovskis stressed that the EU agrees with the report that Russia's economy is "overestimated" and becomes more vulnerable, Reuters reports.
