A Vienna-based think tank has forecasted that Russia’s economy will grow by 2.8 per cent this year and expand at a slightly slower 2.5 per cent in 2025.

The forecast defies predictions that Moscow’s invasion of Ukraine would lead to economic ruin.

Vasily Astrov, an economist with the Vienna Institute for International Economic Studies, said Russian President Vladimir Putin “will not run out of money for the war.’’

“For the Russian economy, the question is rather what comes after the war, as it is currently completely dependent on it,’’ Mr Astrov said.

There has been a massive increase in public spending, especially for the military.

Real wages in Russia rose by almost 8 per cent in 2023, driven by a shortage of skilled labour, while private consumption increased by 6.5 per cent.

This is according to a report by the institute specialising in Eastern Europe.

Despite massive Western sanctions, gross domestic product grew by 3.6 per cent in 2023.

For Ukraine, the think tank expects growth of 3.2 per cent this year, following 5.3 per cent in 2023.

But Kyiv’s increasingly thin air defences were taking a toll, with Russia’s aerial assaults cutting electricity to homes and industry.

“Ultimately, everything will stand or fall on the receipt of adequate and timely military and financial aid from the West. In 2024 alone, Ukraine faces a financing gap of 40 billion dollars,’’ Mr Astrov said. 

(dpa/NAN)