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Patrick Boyle On Finance

Why Is Russia's Economy Growing?

Patrick Boyle On Finance

Patrick Boyle

Business, Investing

4.9308 Ratings

🗓️ 5 May 2025

⏱️ 25 minutes

🧾️ Download transcript

Summary

Since Russia invaded Ukraine in 2022, its economy has surpassed most expectations. Last year, Russia’s economy grew more than the United States and Europe and on top of that Russian unemployment is at a record low. What is causing this growth and how are wartime economies different?


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Transcript

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0:30.2

Since Russia invaded Ukraine in 2022, its economy has surpassed most expectations.

0:40.1

Last year, Russia's economy grew more than the United States and Europe, and on top of that, Russian unemployment is at a record low. Vladimir

0:47.0

Putin and Russian supporters have hailed this as a great success and as of evidence that Western

0:53.6

sanctions didn't work.

0:56.0

It's worth noting that the Ukrainian economy also outgrew the United States and Europe over

1:01.9

the last two years, having grown 2.9% last year and 5.5% the year before. But, of course,

1:10.1

no one is trying to claim that business is booming

1:13.1

in Ukraine. With some carefully chosen numbers, you can put a very positive spin on the growth

1:19.7

of the Russian economy. And the reason for this is that wartime economies are very different

1:25.6

to peacetime economies, and so we have to analyze them

1:29.0

differently. While wars are destructive of physical and human capital, these don't show up

1:35.8

in national income accounting. Spending on weapons production and the vast spending required

1:41.5

to reorient Russia's economy, which used to face towards the

1:45.6

West and now faces towards the East, boosts GDP. As impressive as the GDP growth rates in Ukraine

1:53.7

over the last two years might at first sound, they come in the wake of a 30% decline in

1:59.9

GDP in 2022 when the country was invaded.

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