“If fiscal expenses remain at their January levels throughout the remainder of the year, the NWF reserves could vanish in just three months. And even if they don’t — as is more likely — 2025 is probably the last year Moscow will be able to fully cover its fiscal deficit by tapping into those savings.”
This pretty much nails the article.
But there are things the article doesn’t mention, so it’s even worse than that. Because the real estate market is on the brink of collapse.
And the financial institutions are not well bolstered, because they’ve been forced to lend money to the weapons industry, so the Russian state can buy weapons below cost price!
So if the real estate market collapses, the banks will collapse, and apart from the extreme economic slow down that causes, the weapons industry will simply not be able to make weapons for the Russian army!!!
It’s all a house of cards, and there are many more fractures in the Russian economy than this, but this is the most obvious AFAIK.
As things are going, there is no if, It sems to be literally only a matter of time when the Russian economy will collapse. Some are guessing that it can’t hold longer than until Mid summer. But Russia has this weird tradition, where people keep meeting for work, even if they haven’t been paid for months?! This could possibly extend it a bit further.
This key point is worth mentioning too IMO. Russia is out of options, because every aspect of their economy is stressed beyond sustainable limits already.
This gave me a chuckle, it’s such an understatement.
Not mentioned in the article, but mentioned elsewhere - trains. Russia relies heavily on trains to move things. One part of train maintenance is the replacement of bearings. Russia can’t manufacture bearings for its trains and it can’t import them either because of sanctions. Russia has fewer and fewer operational trains and train cars. One very important thing that the trains haul is grain. There are reports that Russia could face starvation by the end of the year if it doesn’t get its trains repaired because they will be unable to haul food to the cities. Russia doesn’t have enough trucks and roads to replace the trains.
I’ve heard a lot about Russia not being able to make good ball bearings, so I think you are right it will impact transportation especially by train.
Regarding food, Russia is also likely to have way below average harvest in 2025 for several crops. Because they can’t import quality seeds, and have to make do with Russian seeds that have lower yields.
Note that this import is not restricted by embargo, because it’s for basic food items which have exceptions. It’s simply Russia themselves that prevent imports, probably because of lack of currency for imports.
So for sure prices of basic food items will go up in 2025, also more than inflation itself would require. And this is very likely to cause huge problems for especially pensioners and other low income households.
I don’t think we will see widespread starvation, but shortages rising prices and possibly food stamps are very likely.
I think the inevitable outcome will be China buying up a lot of Russia’s economy in the form of property, businesses, and access to natural resources.
Probably the US will do that too :)
Hmm, Trump might actually attempt it, but I think Russia in general is far more likely to sell to Chinese interests and accept a long-term Chinese presence.