The cost of war: Inside Russia's economic unease
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What is the current state of Russia’s economy and why is it under strain?
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Hello, welcome to the documentary from the BBC World Service. My name's Ed Butler and today we're asking what is going on inside the Russian economy?
Everything here is closed down. Here was a cafe, now it's forehand. How painful, how frustrating.
Yes, stories of growing economic struggle in one of the oil and gas-producing powerhouses of the world. Is the toll of the Ukraine war beginning to tell?
We understand it's going wrong. No future. They stop investing in the people in the future, in the long run. They
try to survive. Unpicking the reality of Russia's economic pain. That's coming up on Business Daily, exploring how work and money impact people around the world.
Filling
up at gas stations in Russia seems to be getting increasingly stressful these days. This was an argument over alleged queue jumping. Russians are having to wait six hours or more sometimes to fill their fuel tanks. The reason? Well, largely this is due, it seems, to Ukraine's sustained drone attacks on Russia's oil refineries. And not just those. Ukraine's extended its attacks to include retail warehouses as well, like the Wildberries chain, known as Russia's Amazon. This was the scene of panic after one recent strike in Yekaterinburg. Some small business owners, who house their commercial products inside Wildberries, say they've been
ruined. It's all over. Brands like this don't exist anymore. That's it. That's over. My brand officially no longer exists. Because we have nothing left. The Kalendina warehouse burned down. No inventory and no savings to keep going somehow. I've been wiped out. I'm officially broke.
The lament of one former small business owner. Prices are rising rapidly, and the struggle to get by in Russia is affecting all aspects of life. Take the picturesque Black Sea town of Sochi, Vladimir Putin's favourite resort, which hosted a recent edition of the Winter Olympics. After repeated Ukrainian drone strikes there, locals say it's become a commercial ghost town.
A lot of
empty commercial property. Look, one, two, three, four, five, six. I used to come down here and buy sweets. All these businesses closing down. But
is it really so bad across Russia as a whole? Yes, it's true, inflation and interest rates are up. But President Putin points out that unemployment remains low. And in a press conference last month, he said that the economy was actually still
growing. Economic dynamics are generally modest, but positive. GDP growth is around 1%. It is clear that economic growth is affected by a number of factors, including external pressure and terrorist attacks on industrial facilities and infrastructure. Of course, there are no critical consequences from such attacks.
But economists say that this growth is unsustainable long term because it's only government spending that's driving it. The state coffers are running low. The deficit is rising. And the low unemployment rate may not be the sign of strength that Vladimir Putin claims. The BBC Russian service economics editor is Olga Shamina.
russia had very poor demography it's fallen population it's very very bad and of course this leads that russian have a big shortage of working force so russia has very low unemployment rate due only to this lack of working people so the new wave of mobilization will make this labor shortage again more even more sharper so it's a big problem And it pushes out of the country people who have opportunities to live, who have competence, who have money, who have skills and so on. So it will be frustrating for the Russian economy because it also loses good human capital, actually.
Meanwhile, certain indicators like inflation and interest rates are historically high still in Russia.
Actually, they are not getting high because the Russian economy was very underfinanced before the war. The government didn't invest in the economy, in society, and so on. They made reserves. And so on, when the war started, it pushed a lot of money into the economy.
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Chapters
4 chapters
1
What is the current state of Russia’s economy and why is it under strain?
0:00–10:24
2
How are Ukraine’s drone attacks on refineries affecting fuel availability for Russian drivers?
10:24–13:49
3
What impact have Ukrainian strikes on Wildberries warehouses had on small‑business owners?
13:49–19:27
4
Why does Russia report modest GDP growth despite rising inflation and interest rates?
19:27–20:19