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The Financial Times: In Tula, Russia’s defense capital, President Vladimir Putin lauded the resilience of the Russian economy against Western sanctions, proclaiming its growth and superiority over many Western economies.
The IMF has upgraded Russia’s GDP growth forecast to 2.6% for the year, acknowledging the economy’s unexpected strength. This resilience is attributed to substantial defense spending and successful evasion of sanctions, particularly in the energy sector, where Russia continues to earn significant revenue despite a decline from the previous year’s record levels.
The Kremlin’s heavy investment in military and war-related expenditures has been seen as a departure from Russia’s post-Communist economic policies, potentially overheating the economy in the future. Despite challenges, such as increased public spending driving inflation and a potential overreliance on military production, the economy has benefited from high energy sales and a pivot towards “military Keynesianism.”
However, this shift has also led to labor market imbalances and a reliance on military spending that could pose long-term risks to economic stability, especially if the conflict prolongs.
The entire article can be read at the link https://www.ft.com/content/d304a182-997d-4dae-98a1-aa7c691526db
