Russia's “war economy” model is holding for now thanks to reserves, alternative income, and policies to contain external spending, but the structural edges—technological, productive, and fiscal—raise the question of how long this margin will last.
Madrid, October 28, 2025 – Total News Agency – TNA – Russia's economy maintains, for now, the capacity to sustain its government's war efforts thanks to its sovereign fund, corporate tax revenue, and reduced dependence on energy exports, although analysts warn of approaching structural tensions that could limit this margin.
Current Situation and Apparent Resilience According to economist Vladislav Inozemtsev, co-founder of the Center for Analysis and Strategies in Europe (CASE), “the possibility of a recession practically does not affect today the economic and political stability of Russia.”
Inflation is around 8% in September—more than double the Bank of Russia's 4% target and quadruple Western standards—and the central bank has cut its key interest rates by almost 50 percentage points to bring them down to around 16.5%.
Year-on-year growth was 1.4% in the first quarter and 1.1% in the second, placing the country on a path similar to the last two years, though with clear signs of deceleration.
War Financing Models The key to the present lies in a model that combines several elements:
A share of oil, gas, and other primary commodities in public revenues that has fallen—from over 50% in 2011-2014 to around 25% by mid-2025. The intensive use of the sovereign fund combined with a relatively low level of public debt (around 17.7% of GDP at the close of 2025, according to CASE). A moderate budget deficit, estimated at around 2% of GDP, which Moscow has managed to cover with reserves and the domestic bond market, avoiding a massive dependence on external debt. The ability to export hydrocarbons and other basic goods, as well as resources to partially evade sanctions: for example, through sales to India and China or alternative routes for oil.
Risk Factors and Horizon of Wear Despite this resilience, analysts are alert to latent vulnerabilities that could erode the country's ability to finance its military operation in the medium term.
Among them:
The lack of productive growth and technological advancement, which limits productivity gains. The gradual depletion of the sovereign fund and liquid reserves; some experts believe they could be depleted by the end of 2025. The still significant dependence on sectors linked to raw materials and oil, which exposes the country to price drops or loss of market share. A strained labor market, high inflation, high interest rates, and weakened business confidence, which reduces the margin for maneuver to sustain both growth and military spending simultaneously.
According to CASE projections, a moderate contraction of between 1% and 1.4% of GDP could occur in 2026 if these imbalances are not corrected.
Conclusion Ultimately, Russia today has the levers to sustain the war front, but the horizon shows growing fissures.
It will be key to observe whether the country makes real adjustments or if the wear and tear accumulates to compromise its military projection capability.
Sources Consulted Stockholm Institute of Transition Economics (SITE) – Report “Financing the Russian War Economy” (2025) Carnegie Endowment for International Peace – “Russia’s Economic Gamble” (2024) CSIS (Center for Strategic & International Studies) – “Russian Wartime Economy: From Sugar High to Hangover” (2025) Atlantic Council – “Russia and Ukraine are locked in an economic war of attrition” (2025)
