Russia's economic decline

 Business Insider:

Russia's economy has significantly more degradation ahead of it, according to the Official Monetary and Financial Institutions Forum.

The London-based think tank pointed to comments from some economists, who say Russia's finances are holding up amid its grinding war in Ukraine and sanctions from Western countries. Economists and experts note that Russia has proved to be seemingly resilient so far, with the International Monetary Fund recently raising its growth target for the nation to 2.6% from 1.1 this year.

But talk of Russia's economic resilience is misguided, and there are deep-rooted issues that will continue to plague its economy, the think tank said.

"Russia is masking a process of significant economic degradation that will continue well into the future and further marginalise its global footprint," Mark Sobel, the US Chair of the OMFIF said in a note on Monday.

Russia's robust military spending has been a key factor in propping up its economic growth so far. But a deeper look into the Kremlin's finances shows a far bleaker picture: Russia's global share of world purchasing power has fallen to under 2%, down from around 4% before the 2008 financial crisis, Sobel said.

Meanwhile, there's evidence that Russia's energy revenues – a key source of income – are plummeting. Urals crude, Russia's flagship oil product, is now trading at a significant discount to the global benchmark. Russian oil traded around $68 a barrel on Tuesday, while Brent traded around $83 a barrel, according to data from Oilprice.com.

Countries also appear less willing to buy Russian crude since the West has resolved to enforce its trade restrictions on Russia. Over half of sanctioned Russian oil tankers are now idling at sea, Bloomberg reported this week.

That's complicated by a swarm of other problems Russia's economy is facing, such as roaring inflation, a weak ruble, and a record shortage of workers, which economists have warned will hinder future growth and productivity.

The country, for instance, is losing a huge amount of human capital as casualties mount on the battlefield, while younger educated Russians have fled the country, Sobel said.
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Russia's unnecessary war in Ukraine has triggered much of the decline. The US and its allies have levied sanctions on Russia and that appears to be hurting the Russian economy.  Russia also looks like a much weaker power because of the failure of its Ukraine operations.

See also:

UK intelligence says Russia lost 400 pieces of equipment during assault on Avdiivka