"A social crisis will come when no one expects it”: Inside the report that cost VEB.RF’s chief economist his job
On Aug. 16, the Russian state development corporation VEB.RF dismissed its chief economist, Andrey Klepach. Two days earlier, The Moscow Times had published excerpts from a report that Klepach had presented in May at a meeting of the Nikitsky Club . The full document, titled “The Russian Economy and Geopolitical Challenges,” was published on the club’s website. The Insider reviewed Klepach’s…
On August 16, Russian state development corporation VEB.RF terminated the employment of its chief economist, Andrey Klepach. Two days prior, The Moscow Times revealed excerpts from a report Klepach delivered in May at the Nikitsky Club. After reviewing the presentation, The Insider identified several crucial points.
Klepach asserted that the world is currently experiencing "unprecedented" challenges since the postwar era. The model of globalization established in the 1980s and 1990s is nearing its limits, and new alliances are emerging. National security and interests have now taken precedence over economic goals.
The Russian economy's dependence on China has reached an extreme level, surpassing previous reliance on the European Union. Klepach questioned whether Russia would become a sovereign regional or global power or a state with an economy heavily controlled by China. The structure of Russian exports and imports indicates this high degree of dependence on China.
Military spending has stimulated GDP growth and increased household incomes, but the economic slowdown and budget problems have slowed the growth of household incomes. Real disposable incomes are projected to rise by 0.6% this year, while inequality has halted its decline. High interest rates on bank deposits and low pensions are among the main factors holding back income growth.
Only pharmaceuticals and fertilizer production experienced growth in 2025, but their growth slowed towards the end of the year, partly due to Ukrainian strikes on chemical plants. This led to a contraction in the first quarter of 2026. Klepach warned that investment would decline by 2.5% in real terms in 2026, with no growth in 2027 if military operations and anti-Russian sanctions continue, combined with tight monetary and fiscal policies.
The Russian economy is unlikely to achieve annual growth rates above 2-2.5%, falling behind global growth, unless sanctions ease and Ukrainian strikes on industrial facilities are minimized.
Written by urgent.news from The Insider's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
