Peeter Luikmel is an economist at the Bank of Estonia. He is analyzing the Russian economy. Is the situation as bad as Putin says? Or is it actually even worse?
The war is very costly for Russia. It has several negative effects. One of them is a labor shortage. The labor market in Russia is under significant pressure. The absence of workers and rapidly rising costs hinder economic growth.
The Central Bank of Russia is concerned about inflation. Inflation has been high for several years. The central bank has lowered the interest rate from 21% to 15%. However, due to the labor shortage, the central bank must limit economic expansion.
Many workers have left Russia. They go to study or for other reasons. Mobilization brings psychological pressure on young people. Many students stay abroad for extended periods. This does not help the economy.
The service sector faces a significant labor shortage. Many positions are filled by minors. Low-wage jobs are the hardest to fill. Therefore, wages have risen quickly.
The construction sector also has problems. Loan interest rates strongly affect this sector. Labor shortages and high-interest rates hinder work.
The oil market is currently favorable for Russia. Russia sells oil at high prices, especially to China. Sanctions are not very effective. Russia always finds buyers for its oil.
The problems of the Russian economy also affect ordinary people. Prices are rising, and people's lives are becoming harder. Many do not have jobs or have died in the war. This hinders further economic growth.
The International Monetary Fund predicts that the Russian economy will grow by 1.1%. However, this growth is small compared to previous years. The price of oil is high, but other factors hinder growth.