Putin’s War on Ukraine Has Only a Minimal Impact on Russia’s GDP

A new analysis from The Economist has shown that Russia’s invasion of Ukraine has had surprisingly low fiscal costs on Moscow, amounting to only about 3% of Russia’s GDP, or around $67 billion annually. This figure is historically low compared to other nations during major wars, such as the Soviet Union during World War II, which spent around 61% of GDP on combat efforts. The relative lack of fiscal burden is partly attributed to Russia officials’ assertion that this is not a war, and for economic reasons, such as avoiding inflation from printing more cash to fund the war on Ukraine. Russia’s economy has still taken a hit, with a 5% drop in industrial production in April and a historic labor shortage, leading to some estimates suggesting that around 1 million people have left Russia.