CaliToday (29/12/2025): After two years of defying global sanctions through wartime spending, the Russian economic engine is finally sputtering. New data reveals a sharp slowdown, suggesting that the Kremlin’s ability to finance its invasion of Ukraine may be hitting a definitive wall as the conflict enters its fifth grueling year.
A Stagnating Engine According to Rossat, Russia's national statistics agency, GDP growth for the first half of 2025 slowed to a meager 1.4% year-on-year the lowest since the 2022 invasion. Even more concerning is the quarterly trend: a 0.4% uptick in Q2 follows a 0.6% contraction in Q1, marking the first period of sustained weakness since the war began. The International Monetary Fund (IMF) has adjusted its full-year forecast downward to just 0.9%, a stark contrast to the rapid expansion seen in previous years.
The Oil Shield is Thinning For years, Russia stayed afloat by pivoting its energy exports to China and India. However, that lifeline is fraying. With global energy prices softening, Russia's oil and gas revenues plummeted 22% in the first 11 months of 2025, with a catastrophic 50% drop projected for December.
To plug the deficit, the Kremlin has depleted its National Wealth Fund and hiked taxes, yet these moves have failed to suppress rampant inflation. With interest rates remaining at punishingly high levels, consumer spending has evaporated, and the Russian Central Bank is now sounding the alarm over a potential debt crisis. Analysts warn that if current trends persist, a full-scale banking collapse could ignite by October 2026.
The Human and Material Cost On the ground, the "cracks" are becoming visible to the average citizen. Unpaid wages have tripled, and many factories have moved to reduced hours or temporary layoffs. For the first time since early 2023, the specter of stagflation stagnant growth coupled with high inflation hangs over the nation.
Critically, Russia’s military sustainability is in doubt. The massive Soviet-era stockpiles that fueled the first three years of the war are nearing exhaustion. Experts note that Moscow is increasingly reliant on refurbished, lower-quality equipment as sanctions deprive its industry of high-tech components.
The Strategic Pivot As President Zelensky meets with Donald Trump in Florida to discuss peace frameworks, the economic data suggests that time may not be on Vladimir Putin’s side. While Moscow has intensified its aerial bombardments to project strength, the underlying reality is one of diminishing returns.
The Western consensus is shifting: by maintaining and increasing support for Ukraine, allies are not just aiding Kyiv’s defense but accelerating the moment Moscow’s elites must face a grim choice. Russia is currently on a path toward total exhaustion. The "small victories" touted by Kremlin propaganda today are increasingly seen as the final gasps of an economy that can no longer carry the weight of an endless war.