Russia's war in Ukraine had severely weakened its economy, not just because of a large increase on military spending by the Russian government, but the sanctions of all western powers. As Russia is 2 years into the war, its Ruble has been getting weaker and weaker. As of late, Russia has raised its interest rate to 13 percent, which is almost double what it was prior to the war. To compare, the current US interest rate is 5.5 percent. As the war in Ukraine has taken a larger and larger toll, amid a new Ukrainian counter attack, in recent months the inflation in Ukraine has been increasing further.
"'The Bank of Russia will assess the feasibility of further increases of the key rate at its upcoming meetings,' [The Central Bank] said.
The central bank adjusted its year-end forecast for inflation to 6.0-7.0 percent from 5.0-6.5 percent. Annual inflation was running at 5.33 percent as of September 11, above the 4 percent target." - aljazeera.
Sources Cited:
https://www.aljazeera.com/news/2023/9/15/russias-central-bank-raises-key-interest-rate-amid-weaker-ruble
https://www.bankrate.com/rates/interest-rates/federal-funds-rate/
https://www.cnn.com/europe/live-news/russia-ukraine-war-news-09-18-23/index.html
I hate wars, but don't we all?! Or should I say shouldn't we all? It does no good for anybody, any economy, wars are just BAD! Wars are also expensive which could be an indication to why interest rates are increasing. The Russian government is spending about 1/3 of the public expenditure on the war. They have also lost some of the imports they have previously received from European countries including gas and other things. What else will this war do over the last quarter of the year.
ReplyDeleteI wonder at what point Russia recognizes their poor choice of invading Ukraine and decides to pull its troops out to save its economy. The question probably is what is more important, their image seen by the world or the actuality of the country itself.
ReplyDeleteSO BEYOND TRUE! who knows when that will be because president Putin has a huge ego and wants to win. Just yesterday (09/26/2023) Putin told his defence chief one month to stop Ukraines counteroffensives, there for we can assume intense invasion is about to occur.
DeleteIt is crazy that they are not going to admit that invading the Ukraine was not a smart decision. Even though these numbers support this claim and instead of trying to save their economy they are not going to pull out troops just to prove a point. Russia is known for their pride for their mother country but they are not treating their country very well.
ReplyDeleteI would like to agree that their economy is clearly going to start suffering massive losses if they don't wrap this war up soon. Though I'm surprised there was no mention if they could potentially be profiting off the war in any way, seeing that war can in certain circumstances be a a lucrative venture. An example is WW2 for the U.S.
ReplyDeleteThough they could also be continuing because of the potential prospects of gaining Ukrainian soil, it could outweigh the cons of the war by a substantial margin if there willing to go this far in.
The ongoing conflict in Ukraine has had a significant impact on global geopolitical stability, as well as on the economy, prompting Russia's central bank to adopt decisive monetary measures as we can see. Striking a balance between economic stability and the ongoing conflict presents a significant challenge, necessitating way more careful analysis and strategic responses.
ReplyDelete