Since 2022, Russia has been hit with a sanctions pile-on so large it needs its own filing cabinet. Russia is now the most sanctioned country in the world, and the West has tried to choke off finance, tech, and energy revenue without accidentally detonating global markets.
And yet the headline keeps coming back: the economy is still “growing”.
It did grow. Russia’s official stats revised 2024 GDP growth up to 4.3%. The mistake is assuming that growth equals health. A war economy can run hot for a long time while it quietly strips parts off the civilian engine and sells them for scrap.
The fuel for that “resilience” is spending that forces demand into the system, especially defence. SIPRI estimates Russia’s military spending hit $149bn in 2024, about 7.1% of GDP. That buys output. It also buys distortion. You can keep factories busy by ordering more kit. You cannot order a normal private sector back into existence the same way.
Then the bill shows up in prices. Russia’s 2024 inflation ran at 9.52%. The central bank responded by holding the key rate at 21%. When money costs that much, investment outside the war machine starts to feel like a hobby you used to have.
Sanctions also did not “fail”. They got routed around. The best example is oil.
The price cap system was designed to keep oil flowing while cutting Russia’s take, with the cap initially set at 60 USD per barrel. Russia’s workaround has been the shadow fleet, moving crude outside the normal services and insurance channels and playing games with shipping data. KSE estimates that this helped generate about $9.4bn in extra export earnings over Jan to Nov 2024. That is not a rounding error. That is the sound of a system being gamed at scale.
The other quiet pressure point is reserves. Russia still has buffers, but it is using them. Reuters reported Russia’s National Wealth Fund liquid assets at the equivalent of $52.6bn as of 1 July 2025. That cushion helps smooth shocks. It does not make the underlying model sustainable if the war spend stays elevated and oil revenue stays volatile.
So the real picture is not “sanctions do nothing”. The picture is adaptation. Russia has built an economy that can look fine from a distance while it becomes more lopsided, more expensive to run, and more dependent on workarounds and partners who do not do favours for free.
The danger is not a dramatic collapse on a tidy schedule. The danger is a long drift where the war economy keeps the lights on, the civilian base gets thinner, and the bill arrives later, with interest.