Putin's government hiding extent of negative impact on russian economy due to war in Ukraine - ISW

Analysts from the Institute for the Study of War (ISW) indicate that the Kremlin government is extending its information campaign to hide the extent of the negative impact on the russian economy due to the war in Ukraine.

"The Kremlin continues to conduct an information campaign, likely aimed at both domestic and international audiences, which aims to hide the extent of the negative impact of russia's long-running war against Ukraine on the russian economy," ISW stated.

Russian prime minister Mikhail Mishustin met with russian president vladimir putin on February 7 to discuss the state of the russian economy.

"Mishustin said that russia's GDP grew by 4.1% in 2024, largely due to "intensive" growth in russia's manufacturing industry - likely referring to russia's expansion of its defense-industrial base since the start of its full-scale invasion of Ukraine in February 2022," ISW said.

Mishustin claimed that the main contributors to the growth of russia's manufacturing industry were machine building, transport engineering, automotive, and the production of computer and electronic equipment.

He also said that inflation in russia reached 9.52% in 2024, while putin declared that as of February 3, 2025, inflation was already 9.9%.

"However, real inflation in russia is much higher than the official statistics that the Kremlin is willing to publish (some studies indicate that the inflation rate in russia is closer to 20%)," ISW stressed.

Mishustin emphasized russia's low unemployment rate in 2024 - 2.5%, but only briefly acknowledged the significant labor shortage in russia, which is the reason for the low unemployment rate in russia.

Mishustin noted that russia's economic growth may be less significant in 2025, as it is very important to stop inflation and ensure long-term economic growth.

"…it is probably a signal to prepare the russian population for economic difficulties in 2025. Mishustin and putin also tried to present the russian economy as stable in the face of international economic pressure. Mishustin argued that russia's fuel and energy complex is adapting and finding new markets," ISW reported.

Mishustin argued that the russian economy has "successfully coped" with "unprecedented sanctions pressure" in recent years, and that anti-russian sanctions are hurting the countries that have imposed them more than the sanctions are hurting russia. Putin also tried to present the russian economy as stronger and growing faster than Western economies.

“Mishutin and putin, in particular, did not mention that the russian Central Bank raised interest rates to 21% in October 2024, or how russia has used funds from the National Welfare Fund to finance its military efforts over the past three years.

The liquid part of the russian National Welfare Fund could be exhausted by the fall of 2025,” ISW concluded.

Key ISW findings for February 7:

• Ukrainian forces made some progress during mechanized assaults on the front line in the Kursk Oblast on February 6, but russian sources claimed on February 6 and 7 that russian forces had at least temporarily halted the advance of Ukrainian forces southeast of Sudzha.
• The Kremlin continues to wage an information campaign, likely aimed at both domestic and international audiences, aimed at concealing the extent of the negative impact of russia’s long-running war against Ukraine on the russian economy.
• The Ukrainian military continues to emphasize the growing potential of drone production and their effectiveness on the battlefield, but acknowledges that Ukraine must resolve the problems of providing its armed forces in order to fully stop russia’s advance in eastern Ukraine.
• Syria’s acting defense minister, Murhaf Abu Qasra, said in an interview with the Washington Post that Syria is open to russia retaining its air and naval bases in Syria if it is “beneficial” for Syria.
• Azerbaijani-russian relations continue to deteriorate after russia refused to take full responsibility for the December 25, 2024 downing of an Azerbaijan Airlines (AZAL) passenger plane, which was likely shot down in mid-air by russian air defenses before crashing in Aktau, Kazakhstan.
• On February 7, the Cabinet of Ministers of Ukraine appointed Lieutenant General Yevhen Moysiuk and Captain Valerii Churkin as deputy defense ministers.
• Russian troops recently advanced near Borova and Toretsk.
• The russian government continues to use its "Heroes' Time" program to appoint veterans of the war in Ukraine to positions in regional government bodies.

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