Russia’s military spending is set to reach USD 115 billion in 2024, The Economist noted.
This equals 6% of the country’s GDP, three times higher than combined spending on education, health care and the environment, according to news outlets.
Russia is shifting to a “long-term war economy,” gearing up for “years of fighting” to succeed in its full-scale invasion of Ukraine, The Economist reported.
To achieve this, Russia expects its oil and gas revenues to rise by more than a quarter in 2024; the rouble to average not more than roughly 90 to the dollar; and GDP to rise by 2.3%.
All of these figures may fall short of expectations, The Economist noted.
Moreover, a devalued rouble makes imports more expensive, fuels inflation and means interest rates have to be kept high, according to experts.
On Friday, the Bank of Russia hiked interest rates for the fourth time in a row, to 15%, the Reuters news agency reported.
Meanwhile, higher spending on defence diverts resources away from public services such as education and healthcare.
Higher taxes are a further brake on growth, The Economist added.
All of these factors mean that Russia’s “long-term economic outlook is bleak,” according to the magazine.
Wednesday is day 616 of Russia’s war on Ukraine.
Russia invaded Ukraine on February 24, 2022, launching the largest military campaign in Europe since World War II.
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Source: The Economist, Reuters