Russian Economy Faces 'Burnout'

Vladimir Putin admits difficulties” as the country’s key interest rate reaches a historic high

- BRENDAN COLE

THE EXPENSE OF VLADIMIR Putin's full-scale invasion of Ukraine, as well as his apparent plans to maintain the war, is putting Russia's economy in danger of "burnout," according to new analysis.

That assessment by the Institute for the Study of War followed a decision by Russia's Central Bank, led by Elvira Nabiullina, to increase its key interest rate by 2 percentage points to 21 percent-the highest level in modern Russian history.

"Russia's economy and war effort is coming under increasing strain," the ISW said in a recent statement, noting this will "pose increasingly acute challenges" to Putin's ability to sustain the war over the long term.

The ISW said the costs of funding the war will increase as Moscow continues to expend manpower and equipment.

"Russian resources are finite, and Putin cannot reckon with these costs indefinitely," it said.

"Russia's economy will reach a burnout point." That may force the Russian president to make major decisions about how to resource the war or change its method of fighting to preserve his regime's stability, the Washington, D.C., think tank added.

Putin, meanwhile, was forced to admit that sanctions on Russia and worker shortages have contributed to economic turbulence in the country.

"Difficulties and imbalances remain in the economy," he said following the announcement by the Central Bank.

"They are primarily caused by those difficult conditions in which we build up industrial, agrarian, and financial potential."

The Russian president referred to issues caused by "external sanctions" as well as "shortages of personnel and technology, logistics. These factors are reflected, among other things, on the dynamics of consumer prices.".