Putin scolded his economic team on live television. Western intelligence agencies say Moscow is hiding the economic damage. Russians pulled billions of rubles in cash from their accounts in a single week. But Middle East oil windfalls have papered over the cracks—and bought the Kremlin enough runway to keep fighting.
Russia’s financial position has shifted substantially since February.
Each signal is real. Whether they add up to the imminent collapse that Russian opposition economists have predicted for three years is another question. Russian economist Vladislav Inozemtsev told Euromaidan Press in an interview this month that Russia’s financial position has shifted substantially since February. Any relief, he warned, will go straight into military spending—not into the civilian economy Russians live in.
The stress is visible
Russia’s GDP grew 4.9% in 2024. Last year it grew 1%. In January and February 2026, it contracted by 1.8%—a figure Putin himself acknowledged. The federal budget deficit has doubled year-on-year to 4.5 trillion rubles ($60 billion).
The Swedish annual report also flagged an emerging banking crisis in Russia.
Sweden’s military intelligence chief Thomas Nilsson said the Russian Central Bank is understating inflation—the official rate of 5.86% against a reality closer to the 15% key interest rate—and that Moscow is hiding a $30 billion gap in its deficit. German intelligence agrees. The Swedish annual report also flagged an emerging banking crisis in Russia.
Independent analysis is more cautious. An October 2024 Bank of Finland study found Russian budget data deviating from pre-war patterns but no compelling evidence of deliberate manipulation. The irregularities, the Finns concluded, may reflect structural shifts from the war itself rather than deliberate fraud.
“There is a structural flaw in Russia’s system.”
Inozemtsev pushes back on the inflation reading. Russian inflation, he told Euromaidan Press, is “not so much monetary as the result of coordinated price hikes by the government.” State monopolies drive the dynamic, he said—tariff hikes feed into tax hikes and spread across the economy. Interest rates alone cannot fix that.
“There is a structural flaw in Russia’s system,” Nilsson said—a war economy that builds military hardware only to see it destroyed in combat.
The anxiety is showing up in cash. Between 3 and 10 April, Russians withdrew 240 billion rubles ($3.19 billion) from bank accounts—the highest weekly figure of the year. Total cash in circulation climbed to 19.85 trillion rubles ($264 billion).
Many are pulling cash out ahead of the new controls.
Officials blame mobile internet disruptions. At the same time, the Finance Ministry is preparing to let tax authorities track bank transfers above 200,000 rubles ($2,656) a month. Many are pulling cash out ahead of the new controls.
In this climate, Putin summoned Elvira Nabiullina, his Central Bank chief of nearly 13 years, and the rest of his economic team for a televised scolding. “I hope to hear detailed reports why macroeconomic indicators are falling short of expectations,” he said.
Oil bought him time anyway
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Then the Iran war happened. Brent prices surged. Russian crude jumped from around $42–45 per barrel to roughly $100.
Russia’s oil export capacity is already under severe pressure. Reuters calculated on 25 March that roughly 40% of that capacity—around 2 million barrels a day—was offline after Ukrainian drone strikes on the Primorsk and Ust-Luga Baltic ports, pipeline damage, and European tanker seizures.
Even at those reduced volumes, crude at around $100 a barrel generates more revenue than pre-war volumes at pre-war prices.
Trump issued sanctions waivers letting India and other countries buy Russian oil.
Washington has also eased the pressure. Trump issued sanctions waivers letting India and other countries buy Russian oil, and now extended them into May. Inozemtsev doubts the previous sanctions regime will be restored.
The IMF has already raised its 2026 forecast for Russian GDP growth to 1.1%, up from 0.8% in its January projection, citing higher commodity prices from the Middle East crisis. The revised figure would put the wartime economy slightly ahead of 2025’s 1% expansion.
Strain is not collapse
Western policy has rested for three years on the assumption that sanctions would end the war. Russia’s military-industrial complex is loss-making outside the drone sector, corrupt, and dependent on state loans.
Swedish intelligence flagged Moscow prioritizing military capability buildup near Sweden even as its economy strains. That damage is real. It is also not collapse.
“If the Kremlin feels budget pressure easing, it will simply increase military expenditures.”
The Bank of Finland’s statistical analysis from October 2024 found post-invasion irregularities in Russian data but no compelling evidence of the systematic manipulation a regime would need to hide imminent failure.
Oil at $100 a barrel, Trump’s sanctions waivers for India, and Putin’s televised pressure on Nabiullina have bought the Kremlin runway the collapse thesis didn’t anticipate.
“A collapse is not imminent,” Inozemtsev said. “If the Kremlin feels budget pressure easing, it will simply increase military expenditures.”
Ukrainian drone attacks in March were almost twice as intense as Russian ones, Inozemtsev noted—and that is the pressure actually reaching Moscow.
Russia is straining. It is also still paying for the war.
“A weak economy does not change strategic goals,” Nilsson said. Russia’s war aims haven’t shifted. The strain only affects how fast Moscow can build the capabilities to achieve them.
“The war will be won or lost on the front, not in EU headquarters,” Inozemtsev said.
Russia is straining. It is also still paying for the war. The longer Western policy treats sanctions as the finishing move, the longer the war lasts.
