The Russian economy is teetering on the brink of collapse and disintegration, despite persistent claims of ‘resilience.’ While many economists prematurely predicted this outcome in 2022, their timing was off largely due to underestimating the Russian state’s wartime preparations and the Central Bank’s resourcefulness.
However, the cracks are now undeniable. Key economic indicators—GDP growth, inflation rates, and the dollar exchange rate—are being heavily manipulated by the government. Yet, these measures are becoming harder to sustain. The dollar exchange rate, a straightforward metric to monitor, tells a clear story. Last year, when it crossed the 100-ruble mark, even officials within Putin’s administration admitted the severity of the situation. Temporary measures brought it down to 88-92, but with the rate once again exceeding 100, it appears the government is running out of tools to stabilize it.
If the ruble continues to weaken and the dollar gains another 20%, inflation will undoubtedly surge. More critically, the risk of widespread panic looms large. Fear among the population, even sparked by rumors on social media, could ignite a chain reaction leading to an economic collapse worse than 1998.
The government is acutely aware of this danger, as reflected in their public reassurances downplaying the significance of the dollar exchange rate and interest rates. But such reassurances may not be enough. Should panic set in, the entire economic structure could crumble within days.”