Russian Economy After the Elections

In the aftermath of Russia's recent elections, speculation abounds regarding the government's potential adoption of unpopular measures. These encompass mobilization, exit visas similar to the Soviet era, higher taxes, intensified nationalization, freezing of bank deposits, and even martial law imposition. Concerns about these steps originate from diverse sources, with Western experts focusing on mobilization, Russian economic commentators on deposit freezes and war bonds, and international think tanks contemplating border closures and the dismantling of remaining freedoms.

However, these prospects do not seem inevitable. A closer examination of the past four years, particularly since autumn 2022, reveals that the Kremlin has steered clear of abrupt policy shifts. The focus has been on the "special military operation" concept, which aims to avoid the perception of war by society.

Official statistics on inflation and GDP growth are not entirely reliable, but observable trends indicate that the authorities have refrained from imposing measures commonly associated with wartime, such as banning cross-border transfers, freezing deposits, fixing the exchange rate, or implementing price controls. Tax policy has evolved minimally, with a significant tax on oil and gas extraction introduced in 2022, becoming a permanent surcharge in subsequent years.

Additionally, a tax on large companies' excess profits and an increase in the top personal income-tax rate were implemented in 2023 and 2025, respectively. Small businesses operating under a simplified tax regime also saw changes in VAT requirements from 2026 onward.

Despite the ongoing full-scale war, military spending has surged, and the federal budget deficit has expanded from 3.3 trillion rubles in 2022 to an estimated 5.8-6.5 trillion rubles in 2026. This indicates that the economy has not been "put on a war footing," a concern shared by many Russian elites. Meanwhile, the political landscape has seen a significant intensification of political pressure on citizens, with independent media destroyed, protest activity suppressed, and the number of "foreign agents" soaring.

The authorities demonstrate a willingness to intensify political pressure rather than dismantle the market economy, even if their actions sometimes harm it more than sanctions. Thus, it remains premature to speculate on the Kremlin's potential actions following the State Duma elections.