Russia’s economic path mirrors WWI Germany and late USSR, economist says

Ivan Us, PhD in Economics and Chief Consultant at the Center for Foreign Policy Studies of the National Institute for Strategic Studies, shared his insights on Espreso TV.

"Russia is hiding its economic and social statistics, and it’s easy to see why," Us explained. "Even the official numbers don’t give a full picture of what’s really happening. But despite this, we can still analyze the state of the Russian economy from the limited data they do release."

He noted that unpaid loans in Russia now total $277 billion. "This is a huge amount," the economist said, as loaning has long been a core part of everyday life in Russia.

"For example, in June, Russia’s Central Bank released striking data: Russians owe $277 billion in unpaid loans," Ivan Us said. "This means people haven’t paid back this amount to banks. As a result, banks are losing motivation to lend, and for many Russians, loans are a way of life."

He pointed out that earlier this year, reports showed over 12.9 million Russians have three or more loans.

"This means people are taking out new loans just to repay old ones. If this trend continues, banks may simply stop issuing loans altogether," he warned.

According to Us, inflation in Russia is rising and will keep rising, driven largely by the Kremlin’s massive military spending.

"Inflation in Russia keeps rising as the Kremlin pours huge amounts of money into the military. These problems are creating serious challenges for the country. Many say the Russian economy hasn’t collapsed in three years and is still holding on. But I want to stress that things aren’t moving as quickly as we might hope.

Besides issues in the metallurgical and construction sectors, Russia now faces troubles in agricultural machinery. The leading company in this field has already announced major staff cuts. The coal industry is struggling as well.

Step by step, Russia is heading toward a fate similar to Germany in World War I — losing the war without anyone capturing Berlin. It also resembles the Soviet Union in the 1980s, with many parallels between Russia’s current economic problems and those that preceded the USSR’s collapse," he concluded.

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