The Russian economy is so driven by the war in Ukraine that it cannot win or lose, says an economist.

• The Russian economy cannot win or lose the war in Ukraine, says one economist.

• That is because Russia cannot afford the costs of rebuilding and defending Ukraine.

• The cost of repairing his homeland is already “enormous,” said Renaud Foucart.

Russia's economy is completely dominated by its war in Ukraine, so that Moscow cannot win or win the war, according to a European economist.

Renaud Foucart, senior lecturer in economics at Lancaster University, outlined the dire economic situation facing Russia as the war in Ukraine enters its second year.

Russia's GDP grew by 5.5% year-on-year through the third quarter of 2023, according to data from the Russian government. But much of that growth is fueled by the country's massive military spending, Foucart said, with plans for the Kremlin to spend a record 36.6 trillion rubles, or $386 billion, on defense this year.

“The payment of the military, ammunition, tanks, planes, and compensation for dead and wounded soldiers, all contribute to the calculation of GDP. Simply put, the war against Ukraine is now the main reason for the growth of the Russian economy “said Foucart in an op-ed for. Discussion this week.

Other areas of the Russian economy are suffering as the war continues. Moscow has suffered a severe labor shortage, due to young professionals fleeing the country or being drawn into the conflict. The nation now has a labor shortage of about 5 million, according to one estimate, causing wages to rise.

Inflation is at 7.4% – almost double the bank's target of 4%. At the same time, direct investment in the country has decreased, falling to about 8.7 billion dollars in the first three quarters of 2023, according to data from the Russian central bank.

All of that puts the Kremlin in a difficult position, regardless of the outcome of the war in Ukraine. Even if Russia wins, the nation cannot afford to rebuild and defend Ukraine, due to financial costs and the impact of remaining isolated from other global markets.

The West has avoided trade with Russia since it invaded Ukraine in 2022, which economists say could severely hamper Russia's long-term economic growth.

As long as it remains isolated, Russia's “best hope” is to be “completely dependent” on China, one of its few remaining allies, Foucart said.

Meanwhile, the cost of rebuilding his country is already “enormous,” he added, pointing to problems such as broken infrastructure and civil strife in Russia.

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