Abstract
This report was commissioned by the National Institute of Economic Research (NIER) from the Stockholm Institute of Transition Economics at the Stockholm School of Economics (SITE) to analyze the Russian economy in the shadow of Russia’s war against Ukraine. The analysis includes a background of how the Russian economy worked before the war, detailing how important international oil prices changes have been for economic growth. It also provides a description of the political economy of the Russian economic system and what the trade patterns were prior to 2022. The report then focus on a wide range of economic indicators as reported by Russian authorities and discuss how this is now part of the Russian war propaganda. This includes indicators of fiscal and monetary policy, trade, reserves and the financial system. Inflation and economic growth are particularly important components of the propaganda narrative, and the report provides a critical review of official statistics for these key economic indicators. It also provides some alternative measures of inflation and growth that paints a very different picture of the Russian economy compared to the official numbers. Since the start of Russia’s war against Ukraine, the Western coalition that support Ukraine have introduced sanctions with the aim to restrict the resources available to Russia in waging this war. The report details these sanctions and how they impact the Russian economy. The sanctions have a direct bearing on the medium and longer-term outlook for the Russian economy, including on fundamental growth factors and the increasing risk of a full-blown economic crisis in Russia which is discussed in a separate section in the report. The report ends with a concluding section that summarizes the main ideas of the report. It then also adds a rich list of reference for further reading and analysis for the interested reader as well as an appendix that provide a more comprehensive timeline of the sanction that have been introduce so far.