The Russian Economy Is Going Downhill

( – Since Russia has invaded Ukraine in February of 2022, they have been under economic sanctions from multiple Western countries. Vladimir Putin, the president of Russia, says that the sanctions imposed by the Western powers, including the United States, are not working. He also says that the Russian economy is in very good shape.

However, a Russian economist is actually saying the opposite. This economist is saying that Russia is getting hit hard from the economic sanctions, no matter what Putin or the Kremlin tells the public.

From the beginning, Putin has said that the economic sanctions would have minimal impact on the economy of Russia and would not affect how Russia does its business. Putin in July 2023 stated that Russia’s inflation rates and GDP were positive despite the division.

Igor Lipsits has a different opinion. He says that the actual situation in Russia is surprisingly different, and the key metrics to determine inflation and economic prosperity are “massaged” to distract the public and make it seem like they are in good times. Lipsits was fired from Russia’s Higher School of Economics in August 2023.

Lipsits goes so far as to say that many Russians are living in poverty because of hyperinflation, but the government wants to ignore that. He makes a bold claim that about 20 million Russian citizens are at or below the poverty line. Interest rates could be up to 15%.

In Lipsits’ words, the economists of Russia are making the key numbers look better than they are because they afraid of Putin. They don’t want to make Russia look bad. On paper, the Russian economy grew about 5.5% in Q3 of 2023. However, inflation peaked at about 12% in 2022, and in Q3 2023 it is about 7%. This means that Russian citizens are still worse off.

It is election year in 2024, and Putin will run for president again. He is likely to win, however the state of the economy could hurt his chances of winning.