Russia's economy boomed after the invasion of Ukraine--it's now running out of steam

After years of anticipated economic strife, Russian authorities warn the country is on the precipice of a recession as the Kremlin’s bloated military spending amid its ongoing invasion of Ukraine exacerbates underlying labor shortages and rising inflation.

Russia’s wartime economy, once defiant in the face of Western sanctions and geopolitical isolation, is showing signs of fatigue. On Thursday, Russia’s economy minister Maxim Reshetnikov warned the country was “on the brink” of a recession at the St. Petersburg Economic Forum.

Reshetnikov’s declaration confirmed what several economists foresaw earlier this year: Russia’s high-spending war economy, after years of defying predictions of imminent recession, is finally running into the hard limits of labor, productivity, and inflation.

Russia’s 2022 invasion of Ukraine prompted a slew of sanctions by Western nations, and the near-total departure of Western companies from the nation. But despite predictions of its imminent demise, the country’s economy has held up fairly well by pursuing what economists call “military Keynesianism,” fueling growth through massive defense-related fiscal spending. By pouring a record number of resources into the military-industrial complex, which reached a value of $167 billion last year, the Kremlin spiked industrial production, drove two consecutive years of GDP growth, and lifted wages across war-related sectors.

https://finance.yahoo.com/news/russia-economy-boomed-invasion-ukraine-120800731.html