Since Russia’s start of the Russian war of aggression on Ukraine in February 2022, both the EU, the US and other countries have imposed sanctions against Russia. Many Western companies have also left the Russian market since the outbreak of war, providing an opportunity for local chains to gain market share.
– We are expected to triple our income because of this situation, says the Russian fashion designer Aljona Achmadullina.
And the Russian economy still does not appear to be backing down – quite the opposite. According to the International Monetary Fund’s forecast Russia’s GDP will grow by 2.2 percent this year. Putin himself believes in an increase of as much as 3.5 percent.
The policy rate is 15 percent
In the budget that Putin recently signed, a third of the state’s expenditure is allocated to the military. And according to analysts, it is above all government defense spending that is causing Russia to gain steam right now. It is not only tank and weapons manufacturers that have received more money, but also companies that deal with logistics or deliver clothing, medicine and other goods to the front.
The Russian men who signed up to serve in Ukraine have been attracted by high salaries. According to Alexandra Prokopenko, this means that even civilian companies are forced to follow the wage race in order to compete.
– This money is spent on the local market, which drives up prices and we are already seeing signs of an inflationary spiral, says Prokopenko.
As a result of high inflation and a weak ruble exchange rate, the Russian central bank has decided several times during the autumn to raise its key interest rate. On Friday, the policy rate was raised again – to 16 percent.
“The economy is seriously ill”
Alexandra Prokopenko left Russia shortly after the Russian invasion. She sees the figures as a sign that the Russian economy is not doing well.
– You can say that it is seriously ill. It is definitely overheated, she says.