Page 71 - RusRPTNov23

2024, reaching approximately 6% of GDP. These figures may be conservative as various forms of war spending are concealed within other sections of the budget.
The emphasis on military priorities has strained the labour market by mobilising human resources, contributing to a historically low unemployment rate of 3% in August. Over 300,000 Russian men have been enlisted for the war, causing labour shortages even in industries unrelated to the conflict.
Despite sanctions, Moscow has found ways to import banned components through alternative trade routes, providing some economic relief. Additionally, the rise in oil prices, up nearly 60% since March, has bolstered the economy and government revenue. Putin has revised the budget deficit estimate to just 1% of GDP for this year, half of previous government projections, thanks to increased oil and gas taxes.
However, the Russian economy faces potential threats in the medium term. The emigration of skilled workers following the Ukraine invasion is causing a talent drain, impacting future growth potential. The weakening ruble, down 30% since January, and high inflation rates, reaching 6% annually, could further destabilise the economy. Russia's growing financial dependence on China, its largest trading partner, poses another risk.
The IMF anticipates a significant slowdown in GDP growth to 1.1% next year, and Putin may face tough decisions regarding further spending as he seeks re-election in 2024.
Russia has a war budget for the next three years. The Kremlin plans to spend more on its military than social policies next year for the first time ever and is oriented toward one main goal — victory in the war on Ukraine, according to the country’s finance minister.
“Yes, it’s a large amount in the budget expenditures, but we need this money to achieve the most important task today — the task of ensuring victory,” Finance Minister Anton Siluanov said October 3 at a hearing to introduce Russia’s 2024 budget before the upper house of Russia’s parliament.
71 RUSSIA Country Report November 2023 www.intellinews.com