Vladimir Putin is facing a potential economic crisis that could see Russia plunge into a £30 billion blackhole, according to experts.
Recent data suggests that the National Wealth Fund, which supports the economy during periods of financial shortfall, could be depleted as soon as next year.
Economists at Fink Money warn that this situation could push Russia’s economy into a deep recession.
David Belle, the founder and trader at Fink Money, said: “Russia’s 10-year bond currently yields 15.12 percent, higher than it was in 2008.
“This is largely due to the central bank having to hike rates to a whopping 18 percent.
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“Their national wealth fund is projected to run out of funds by the end of next year, which could plunge their economy into a blackhole.”
The Russian government is reportedly spending around £30 billion annually to cover its current deficit, a figure that economists believe is unsustainable.
James Fox, an equity research analyst at J Fox Consulting, warned that this economic squeeze, combined with sanctions and potential softening of oil prices, will “exacerbate the country’s financial challenges”.
He added: “Recent data points to slowing GDP growth, surging wages, and depleting reserves. All of this is concerning for an economy on a war footing.”
Gabriel McKeown, Head of Macroeconomics at Sad Rabbit Investments, believes the situation is even more dire.
He said: “Russia’s economic resilience is proving to be a mirage, masking a looming fiscal precipice that threatens to upend the nation’s stability.
“The underlying growth is largely artificial, driven by massive government spending on the military-industrial complex, with the war becoming the primary engine of Russia’s economy.”
The depletion of the National Wealth Fund could have devastating consequences, especially with Russia’s ongoing war in Ukraine and significant sanctions from the West.
New research carried out by experts at Fink Money has highlighted the fragile state of Russia’s economy, showing that the country’s growth since the 2014 annexation of Crimea has averaged a dismal one percent.
They estimate that Russia has spent between £140 billion and £168 billion on the war since its full-scale invasion of Ukraine in 2022.
With oil revenues also expected to decline and sanctions having a bigger impact, the Russian government may soon find itself with limited options to avoid an economic collapse.
Belle said: “The war is acting as both a life support system and a terminal illness for the Russian economy.”