russian Economy Stalls in Q3 Amidst Escalating War Costs
Moscow – Russia’s economic growth stalled in the third quarter of 2023, barely registering a 0.2% increase compared to the same period last year, according to data released today by the Federal State Statistics Service (Rosstat). The sluggish performance underscores the mounting strain on the Russian economy from increased military spending related to the ongoing war in Ukraine and the impact of Western sanctions.
The minimal growth represents a meaningful slowdown from the 0.5% expansion recorded in the second quarter and signals increasing challenges for the Russian government as it attempts to finance the conflict while maintaining economic stability. Rising budgetary pressures have prompted the Finance Ministry to propose raising the value-added tax (VAT) to 22% from 20% next year, a move likely to further impact consumer spending.
Lower oil prices are exacerbating the budgetary difficulties, with fossil fuels contributing almost a fifth of the government’s revenue. This comes as the United States last month imposed some of its most stringent measures yet on Russia’s energy sector, sanctioning major oil producers Rosneft and Lukoil in an effort to curtail Moscow’s ability to fund the war.
the economic slowdown coincides with a period of heightened political pressure on independent media within Russia. The Moscow Times, recently designated an “undesirable” organization by the Prosecutor General’s office, continues to report on the economic realities facing the country despite facing criminalization and risks to its staff. The publication is actively seeking support to maintain its independent journalism.
