Pushing on a String
Nicholas Trickett’s economic summary of the week (August 24 — 28)
On August 28, the Russian Ministry of Defense expanded its authority to gather information on Russian citizens and their relatives. This move may not signify an imminent draft but could be an attempt to gather better data for military recruitment. CIA Director John Ratcliffe recently visited Moscow. The timing of this development raises questions about potential military actions, particularly in Ukraine.
Recruitment efforts might intensify in the coming months, especially as strikes on Ukrainian energy and heating infrastructure are expected to escalate over winter. However, even without such strikes, the government aims to bolster its manpower for spring 2027. Recent GDP figures, released by Prime Minister Mikhail Mishustin, have sparked debate. He claimed that GDP surpassed 100 trillion rubles in the first half of 2026, with a nominal growth rate of 0.6%.
Inflation has been a significant concern for Russia, with annualized consumer-price inflation running above 6.2%. Despite this, money-supply growth appears to be slowing down, coinciding with ongoing high inflation rates. This situation has led to a decline in real GDP growth, despite nominal figures suggesting a different picture.
The labor market has also been affected, with vacancy listings falling by 18% in August. Small businesses have reported declining sales, and Superjob data indicates a decreasing number of job vacancies. The situation appears to be worsening, with real wage gains being eroded by inflation and higher labor costs.
The government's approach to addressing these issues through increased spending on the military sector is facing challenges. With the National Welfare Fund holding only about 1.6% of GDP, further reductions in non-military spending are necessary. However, prolonged suspensions of bond auctions could force the government to draw down more reserves.
The current economic situation is characterized by anemic nominal growth, high inflation, and a weakening labor market. While a partial mobilization could provide a short-term stimulus, it may worsen the existing economic challenges in the long run. A more direct approach to managing the economy, controlling key prices, and explicit resource allocation might be more effective in mitigating the adverse effects of the economic downturn.
Written by urgent.news from Riddle Russia's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
