- Russia can avoid crisis for three to five years, the Center for Analysis and Strategies in Europe said.
- Domestic demand has kept the country strong, becoming a key driver of growth, the think tank said.
Russia's wartime economy could be in it for the long-haul — or at least longer than expected.
A team of economists is unconvinced that Russia will tumble into economic collapse any time soon, as suggested by some analysts.
Instead, Russia's economic capability "excludes almost any chance of a serious crisis cause by internal factors in at least three-to-five years perspective," three authors wrote in a report for the Center for Analysis and Strategies in Europe.
The paper counters notions that a Russian crisis will come as soon as next year, an argument made by economists such as Yuriy Gorodnichenko. The UC Berkley analyst told Business Insider that Moscow's slowing energy trade and dollar shortage would cause the crisis.
Even observers within the country expect struggle in 2025, including the specter of staglfation.
But though Moscow is guaranteed to face challenges at some point, the CASE authors cautioned not to translate hardships into proof of a near-term crisis.
Instead, these three trends will keep Russia resilient, they said:
1. Don't underestimate domestic demand
According to the report, Russia's domestic market has been an underrated factor behind the country's perseverance.
After Moscow's invasion of Ukraine, local consumption has kept the economy afloat, with domestic demand overtaking exports as a leading growth driver.
"In the construction sector alone in 2023, up to 30 million tons of steel were consumed (the increase from the previous year amounted to 9 percent), while before the war, in 2021, just over 15 million tons were exported," CASE said.
Moscow's war efforts boosted the purchasing power of millions, as the need for soldiers lifted wages across the country. With more manpower needed at the front-lined, a rising labor shortage at home furthered the wage trend.
Lower-income Russians benefited the most, as recruited soldiers have largely stemmed from economically-depressed regions. In turn, these households spent heavily on domestically-products essentials.
https://www.businessinsider.com/
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