The most valuable resource in Russia are its hard-working, educated, intelligent and resilient people. The biggest impediment on realising their potential is unfortunately their government.NRao wrote: I just do not see anything hurting Russia. Russia is sitting on $72 trillion of natural resources (which is what the Neocons want and are waging this war in UKR) and next up is the US at $45 trillion. As long as Russia has a stable political system I do not see anything happening to them. They have a very robust MIC to add to their resources.
Oil and gas (or other mineral) reserves alone don’t make for a successful economy. Venezuela has gargantuan oil reserves and a total disaster of an economy. Iran has the world’s second largest gas reserves and is also an economic (and social) disaster zone.
As someone once said “Victory has a thousand fathers, defeat is an orphan.” Shifting the “credit” for the Ukraine war to the Neocons would suggest that the “special military operation” has not turned out nearly as well as expected by President Putin.
As for the outlook for Russia’s economy, this is a good /balanced / well-informed article by a former Russia central bank staffer:
The Cost of War: Russian Economy Faces a Decade of Regress
Nine months after Russia’s invasion of Ukraine, the Russian economy is doing better than expected. The predicted collapse has been avoided, and the forecasted 8–10 percent fall in GDP for the year has been reduced to a 3–4 percent drop.
Still, before the war, 3 percent growth was predicted. Recovery is only expected to begin in 2024 at best, and only in the unlikely event that external factors do not significantly worsen. Russia looks set to see yet another lost decade, with a decade of stagnation followed by a decade of regression.
Thanks to these preparations, the effect of sanctions proved weaker than predicted in the short term, but it has also been more prolonged. The budget, buoyed in the first few months by oil and gas revenues, has begun to shrink. Non-oil and gas revenues fell by 20 percent in October in annual terms, and almost all the growth in oil and gas revenues came from the increase in the mineral extraction tax on Gazprom.
The recession is likely to continue because Russian industry—even the military sector—is highly dependent on the import of high-tech goods, predominantly from the West. Technology imports from all countries have fallen, with the exception of Turkey. A collapse in those imports will reduce production and make it more primitive, a process that is already under way.
The voluntary departure of many Western companies and the total break in trade with Europe in energy commodities, along with an absence of equivalent alternatives, will continue to hold the Russian economy back.
Amid the atmosphere of uncertainty, investment is at risk of being slashed. Private business was already limiting investment due to the unfavorable business climate. Now the war and sanctions have killed it off completely.
It’s harder to calculate the long-term losses from the vast number of people who have left Russia since the beginning of the war, which is estimated at 500,000 to a million.
Major difficulties arise from the reorientation of Russian production toward new markets. The throughput capability of infrastructure linking Russia with the East is limited: port, rail, and pipeline capacities are already overloaded, and the creation of new capacity requires resources and technology. Meanwhile, the infrastructure that serviced trade with Europe lies idle as a result of sanctions.
Russia is also under pressure to make compromises and offer discounts on its goods to those who are still prepared to buy them: right now, Russia needs those markets more than they need Russia.
The Russian economy’s prewar potential was not overly large, with growth at 2–3 percent per year. The war against Ukraine and external restrictions have lowered it to about 1 percent. For now, the economy’s development will be put into reverse and it will take three to five years for that decline to come to a halt.
The government and President Vladimir Putin like to repeat that Russia already has everything it needs for development. But a transition to growth based on internal resources would require an end to the war in Ukraine. It would also need less unpredictability overall, increased competition, the decriminalization of economic infringements, and effective safeguards for property rights. The Russian authorities and president have consistently failed to provide those conditions.
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