The war economy in Russia

An analysis of social and economic developments for 2024 in Moscow, reveals one rather obvious and very painful fact: the war will not end this year. The military-industrial sector will continue to attract labor, financial and material resources, increasingly affecting the balance books.

Moscow (AsiaNews) - At the beginning of the year it is normal to read in various publications forecasts of expectations for social and economic developments, and in Russia those by Danish analysts at Saxo Bank, a group that tries to go beyond the estimates of indicators to find even "unpredictable and underestimated" elements, many of which are actually being realized, are causing much discussion. Indeed, events in Russia in recent years have taken turns that even the most daring authors of "anti-utopias" could not have imagined in the early 2000s.

In the Russian analyses of "unpredictable factors" actually one rather obvious and very painful one emerges: the war will not end this year. No matter how much Russia and Ukraine may try to achieve partial successes on the ground, it seems clear that we are not moving toward a "freeze" or an armistice, much less toward the final defeat of the adversary or a satisfactory peace treaty.

And since the war is now the decisive factor in redefining the Russian economy, there is no hope of stabilizing the various sectors undergoing constant change. Suffice it to say that the war has already "swallowed" at least a million people, counting only the 300,000 mobilized and 640,000 contract soldiers, according to official figures, and leaving aside those of the fallen and wounded at various levels. The military-industrial sector will continue to attract labor, financial to material resources, increasingly affecting the overall accounts of the economy.

A decidedly more unpredictable factor concerns the fluctuation in the price of oil, set by Westerners at a barrel as a restraining measure for Russian exports, a major element of the Eurasian economy. Some analyses, on the other hand, assume that the price in 2024 will fall below that threshold, to around , due to slowdowns in the world economy, and especially the Chinese economy.

Moreover, in the medium term, a significant decline in the use of gasoline or diesel fuels is assumed, due to the growth of electric transportation. The limitation to this shift so far has been the lack of the necessary infrastructure for recharging accumulators, but this now seems to have been overcome in most of the most interested countries, including China, and car companies are accelerating on electric variants of transport vehicles.

Reduced energy exports lead to overall stagnation of the Russian economy and reduced production of consumer items. Generous funding from the state is not enough to revive local production, requiring increased imports, which results in a further decline in the value of the ruble.

It is thought that as soon as the dollar exchange rate rises above 100 rubles again, the Central Bank will suspend all trading, closing the Moscow Stock Exchange to "unfriendly" currencies.

ùIt will be the complete and final "de-dollarization" of the Russian economy, desired by the Kremlin, to switch to exchanges with currencies of friendly countries, mainly on the yuan-ruble ratio. The dollar will remain on the black market as it was in Soviet times, and the exchange rate will splash over 150 rubles.

Several other forecasts paint a rather worrying picture, with inflation above 25 percent and the inevitable bankruptcy of small and medium-sized enterprises, and those most dependent on exports, consequences that cannot be curbed by administrative measures alone.

On the contrary, the over-activism of governments, especially local governments, could cause further problems, such as the use of rationing and carding for various items, which would cause ripple effects on all social services.

These and other problems indicate that war and geopolitical turmoil only favors the arms barons and power oligarchs, but brings entire populations to their knees.

• Russia
• Moscow
• economy
• Ukraine
• war
• ruble