Russia’s Economy Grows Despite Military Spending

In the first quarter of 2024, Russia’s economy saw a growth of 5.4 percent, according to official statistics released on Friday. This growth comes amidst heavy militarization and vast military spending by the Kremlin following the Ukraine offensive in 2022. President Vladimir Putin denies that the military spending, which has surpassed eight percent of GDP, is reaching unsustainable levels.

While the increased military spending has helped power growth and mitigate the impact of Western sanctions, it has also led to inflation and drawn comparisons to the Soviet Union’s struggle with excessive defence spending in the 1980s.

Despite challenges such as inflation rates rising and labour shortages in non-military sectors, Russia’s reorientation of energy exports towards China and India has provided some stability. Putin has criticized US attempts to pressure China over its ties with Russia, calling such actions “illegitimate.”

As Russia continues its offensive in Ukraine, the economic impact of its military focus remains a concern. The central bank has raised interest rates to combat inflation, while other sectors face challenges due to labor shortages caused by military recruitment.