Russian economy entering phase of decline, economist says

Financier, economist, and deputy director of Dragon Capital, Serhiy Fursa shared his opinion on Espreso TV.

“Russia released official data for the first quarter of the year — the decline has already begun and stands at 0.5%. Interestingly, this matches the U.S. decline in the same period, which is quite ironic. The drop in Russia might be even worse, but we don’t know for sure, as they could be manipulating the numbers. The key point is that as long as they could flood the economy with money to support it, things more or less functioned. However, this cannot work long-term — they admitted this themselves two years ago. Russian banker Herman Gref noted that this kind of economic model won’t last,” the economist commented.

According to him, Russia is currently shrinking all parts of its economy unrelated to the war.

“We understand that Russia will try to do something about this, but the real issue isn’t economic growth, it’s having the funds to finance the war. War is very expensive for both Ukraine and Russia. Russia is now relying on the National Wealth Fund and printing money. Printing money always ends badly, but as long as this fund exists, they’re managing. However, the fund will run out within the next 6 to 9 months. After that, the decline will accelerate because they’ll have to rely solely on printing money,” Fursa explained.

• Russia, amid falling oil prices, a growing budget deficit, and problems in the banking sector, is rapidly approaching an economic crisis.