Four years after Russia's full-scale invasion of Ukraine, the Russian economy is showing clear signs of structural exhaustion. The contours of a genuine economic endgame are coming into view for Russia. This is the finding of a new Kiel Report published by the Kiel Institute for the World Economy and the Stockholm Institute of Transition Economics.
I’m not sure if we have the same idea when it comes to collapsing. In my mind it’s a bit more than a shrinking economy and inconveniences for some things in daily life. I would say that a collapsing economy results in instability on many levels, high rates of joblessness, countless companies going bankrupt, societal unrest, rapid price fluctuations of practically everything, etc. Some of those things are happening in Russia, but not nearly enough to call it a collapse imo.
I don’t really disagree with that, but much of that has actually been happening for some time. Many small companies have closed, but Putin has ordered banks to not declare companies bankrupt. which is why we haven’t seen the big bankruptcies yet, and we haven’t seen the unemployment yet. Regarding price fluctuations we have also already seen inflation increase despite high national bank interest rates that have helped keep it down. But it’s estimated prices in Russia have increased by about 50% since Russia started the war 4½ year ago. There is also not social unrest yet, but there is frequent fighting in the lines to get fuel.
So almost everything you expect to see is happening. And some of it has already happened for a while. A collapse is not a sudden thing, especially for a country as big as Russia.
It’s a gradual thing that happens over time, where things continue to get worse. And they’ve been getting worse in Russia for a couple of years, but now it’s beginning to accelerate really fast.
Putin and Russia have been very good at kicking the can down the road, but now it’s many cans, and the road is pretty steep now, so they can’t really kick them much further.
I bet the point where you would call it clearly a collapse too is very close. Many Russians are comparing conditions now with the collapse of the Soviet Union, and people are talking outright against Putin, despite you can go to prison for that, and going to prison can easily be a death sentence.
Fair enough, perhaps I was wrong about thinking no collapse will happen soon. Time will tell. I suppose it could happen if the energy sector collapses, it will drag everything along with it, no help from China can stop that I think.
Yes absolutely, without energy everything collapses very quickly.
In Crimea they have extreme fuel shortage, and private people can’t buy fuel at all.
Most places are without electricity, and have maybe 1-2 hours electricity per day. The lack of electricity also has the result that they have no water, because there is no energy to pump the water.
Obviously you can’t store fresh food either, so everything that doesn’t have long shelf life rots in days.
And food in shops is rationed.
In Crimea there is no doubt that basically everything has collapsed, but Crimea is just about 2 mil people, not a lot compared to the 140 million of all of Russia. But what has already happened to Crimea is happening even to Moscow now, but it takes more time, because what is happening in Moscow is a result of what is happening in Russia in general.
Ukraine claims they have taken out more than 40% of Russia’s oil refining capacity. And logistics/transports are already collapsing, when that collapses everything else will follow.