Russia’s economy surprised many by remaining resilient in the face of international sanctions following President Vladimir Putin’s full-scale invasion of Ukraine more than three years ago. At one point it even appeared to be running the risk of overheating.
But cracks in the $2 trillion economy are now abundantly clear. This newsletter suggested in November that 2025 would be a year of consumer retrenchment as Moscow was forced to choose guns over butter. That dynamic was on display this week: Putin attended a flag-raising ceremony for Russia’s latest nuclear-powered ballistic missile submarine, the fifth of the new Borei-A class built in the past six years. Meantime, car sales for June came in with a 30% plunge.