In early February 2022, Russia launched a full-scale invasion of Ukraine. In response to the invasion, countries imposed steep sanctions on Russia. Now with the liberation of Kherson, can Russia still sustain and fight the war against Ukraine? Has the Russian economy started falling apart? We can figure this out by looking at its currency, gross domestic product (GDP), stock market, and net migration.

If we look at the Russian rouble against the US dollar, we can see that the Russian Rouble is stronger against the dollar than normal. This would normally be a strong economic indicator, but this is artificial. The government and banks have increased the demand for the Russian Rouble so much by freezing Russian assets (Roubles, land etc.). This is likely to have an impact on the Russian economy even after the war.

The Russian government hasn’t released the GDP growth for this year, but there have been predictions as to the growth or contraction that will occur. The Russian Economic minister, Maxim Reshetnikov, predicts that the Russian GDP level will contract by 2.9% in 2022. As these numbers come from Russia itself, there is reason to be skeptical. The Russian economy is likely to contract more than Russia claims.

Another indicator the Russian economy is not doing well is net migration. Ever since the introduction of mobilization for the Russian army many citizens have left the country to avoid conscription. This can lead to the Russian economy struggling due to a lack of workers. Another issue facing Russia is something called ‘brain drain’. This is when a country’s experts and smart people start to leave a country leaving a deficit of skilled labor.

There is one area, however, where the Russian economy is actually doing well. Due to the sanctions, many European countries stopped buying gas from Russia. Since Russia’s main money supply is from exporting gas, and many countries stopped buying gas, the price for Russian gas has increased. Countries that still maintain a healthy relationship with Russia like India, China, Pakistan, and Iran still bought Russian Gas. Especially India and China which use a lot of electricity and need to buy Russian gas even at a more expensive price. The price of gas was high enough that Russia made more money than before.

Overall, the Russian economy is not doing well. The Russia-Ukraine war seems to have a bigger negative impact than a positive impact on Russia. The Russian Rouble is stronger than usual, The GDP will Contract in 2022, and the net migration in Russia is high. Can Russia really sustain the war? Probably the Russian economy won’t sustain itself for long enough to hold the annexed parts of Ukraine.