Russia’s ongoing war in Ukraine damages the Russian economy, inflates domestic prices, and compels Moscow to allocate one-third of its budget to defense, according to the US Treasury Department, Financial Times reports.
The interplay of war, sanctions from US allies, and Moscow’s policy responses is “putting Russia’s economy under considerable economic strain,” Rachel Lyngaas, the department’s chief sanctions economist, says in a draft text seen by the Financial Times.
Lyngaas wrote that Russia’s invasion of Ukraine and the occupation of its parts were “contributing to rapidly growing expenditures, a depreciating rouble, increasing inflation, and a tight labor market reflecting a loss of workers” in its economy.
Russia’s economy would be more than 5 per cent bigger if Putin had not launched the war in Ukraine, Lyngaas argued, adding that the country was underperforming other energy exporters, including the US.