In this paper, we did not set out to describe all the factors significant for the Russian economy or to offer precise quantitative forecasts of its future. Our goal was to pinpoint the trends that, in our assessment, are either underestimated or, conversely, overestimated in the public and professional discourse about the prospects for Russia’s economic development. Therefore, we focused on the likeliest, inertial scenarios for the course of events, excluding those that are hard to predict or calculate.
If one examines current trends in the Russian economy impartially without overemphasizing the transformations precipitated by the war, it becomes clear that the past three and a half years appear more as a continuation of trends traceable since 2012 than as a dramatic turning point leading to major change. Indeed, the gigantic fiscal stimulus— the injection of large amounts of money into the economy, financed through accumulated reserves and ruble devaluation—did spur accelerated growth in 2023 and 2024.20 However, the return to a restrained fiscal policy has erased the prospects for continued expansion. Most of the significant economic processes—such as the decline of Western investment, the “pivot to the East,” and the “nationalization of the elites”—took shape long before 2022, and the war merely accelerated their development.
20 — An important role in boosting growth at that time was played by the concentration of resources in a few narrow sectors and a significant increase in household income resulting from the transition to a contract-based (mercenary) army. The price of this acceleration was higher inflation, which required a sharp increase in interest rates by the Bank of Russia, causing a decline in civilian industrial sectors and bringing this year’s growth rate down to zero.
The declared confrontation with the West, the glorification of “import substitution,” the defense of the “Russian world” heritage, and many other similar ideological constructs have shaped the “new Russia,” leading it to war. Yet the movement in this direction did not begin on February 24, 2022, nor can it be said that the country’s trajectory has since reversed. The “new Russia” is characterized by the dominance of political goals over economic ones and by the willingness of a significant portion of the population to accept this as the norm.
Having embarked on this path and realizing that the stagnation and the gradual decline in living standards do not provoke social or political protest, the Kremlin has shifted the priorities of its policy from economic development to the preservation of the existing order and the strengthening of its resilience. The war and the sanctions initially created a sense of collapse in the established way of life, which was soon replaced by a sense of relative improvement. Now, however, as the “dust has settled,” there is growing reason to believe that it was the transformational downturn and the subsequent Keynesian-style recovery that were temporary, not the stagnation to which the Russian economy has returned in 2025—and in which it is likely to be locked for the coming years.
We do not claim that “nonlinear” movement in Russia’s future is impossible (the situation could change dramatically at any moment due to unexpected and perhaps random events). Yet discussions of such prospects tend to have little more predictive power than reading tea leaves. Meanwhile, if one extrapolates current trends and disregards potential “black swan” events, it becomes difficult—even over a ten-year horizon—to discern preconditions for either a catastrophic deterioration or a substantial improvement in Russia’s economic situation. What does emerge clearly, however, is a narrow corridor, lined with numerous constraints, that keeps the economy from moving beyond its limits in either direction.
It should be emphasized that although such “non-development” does not contradict the values of an archaic and indoctrinated population, it appears extremely dangerous under current conditions. We can see that the pivot from the West to the East has almost completely cut off the inflow of foreign direct investment into Russia and halted the transfer of technology, since China’s strategy toward all its partners is to integrate new countries into its sales and supply chains, but not its technological ones. Throughout the world, China invests only in resource extraction and infrastructure projects, not in advanced technology sectors.
Against the backdrop of a new technological revolution rapidly unraveling in both the U.S. and China, the odds of Russia trailing global technological trends appear to be very high. Should that happen, a zastoy could evolve into catastrophic backwardness—resembling in many ways the plight of the 1980s Soviet Union, which was only partially mitigated (and to be more precise, softened rather than overcome) by the dismantling of the planned economy and Russia’s cautious integration into Western production chains. Such a trajectory must be regarded as a very real risk amid continued aggressive confrontation between Russia and the West.
The main—and perhaps the only—threat to the stability of Putin’s economic regime is Putin himself. It is difficult to predict how quickly and to what extent this risk may materialize, but one should not underestimate the speed with which, in a system where politics takes precedence over economics, mistaken decisions can destroy economic well-being.
The impact of any other factors—except for exogenous “black swans”—is quite limited. In particular, regarding Western policy, significant effects on the Russian economy are virtually impossible under the current sanctions strategy. (They could perhaps be achieved through a naval blockade or similar measures, or by abandoning sanctions against Russian private capital and instead encouraging its flight abroad, but neither of these options appears likely today.)
We have sought to assess as realistically and unemotionally as possible the capacities and prospects of the Russian economy. Any strategic approach toward Russia should reasonably proceed from the assumption that, within the foreseeable future, Putin’s regime will not face serious economic constraints preventing it from pursuing an aggressive foreign policy, including the continuation of the war at its current scale. Such constraints may eventually emerge—but for reasons that are extremely difficult to influence from the outside. At the same time, Russia’s ease of adaptation to sanctions and its relatively favorable economic performance over the past two years do not constitute a foundation for long-term economic growth or technological modernization.
In recent years, the Russian economy has indeed reduced its dependence on the types of risks that most analysts used to regard as critical. That being said, it has increased its exposure to other kinds of risks. More importantly, the mitigation of certain vulnerabilities has come at the cost of a disproportionately large decline in long-term development prospects.
In our analysis, we did not examine the scenario—considered quite likely by some experts—of a rapid technological leap, which the global economy may now be approaching. We do not claim expertise in these matters, and our understanding of ongoing developments may be incomplete or distorted. Nevertheless, it would be unwise to ignore what is happening or to overlook emerging trends. The areas in which major breakthroughs are most likely— biotechnology, AI, and robotics—are well known. It is precisely in these fields that the competition between the United States and China is unfolding, as an extension of their geopolitical rivalry.
It is impossible to predict exactly which innovations will transform the global economic order, when they will emerge, or how profound their effects will be. However, if rapid technological breakthroughs begin to materialize during the forecast period, the “new Russia” will face very high risks—far greater than 10, 15, or 20 years ago—of being sidelined for the coming transformation. In terms of technological progress, today’s Russia cannot be counted among the leaders or drivers of future change. Moreover, the position that Russia has carved out for itself in the modern world—the values it promotes and the principles it follows in dealing with other countries—may prevent it from benefiting from the results of global technological restructuring. It will effectively cut itself off from the emerging new value-creation chains.
Before the war, Russia could still, albeit to a limited extent, benefit from the results of global technological progress. Today, by entering into confrontation with the West, it has restricted its access to advanced technologies to a single “Chinese door.” The key to that door is kept in Beijing.
A global techno-optimistic scenario, combined with an ongoing “ice age” in Russia’s political relations with the West, could turn the current economic stagnation— which Russia under Putin has virtually no chance of avoiding—into a “new normal,” a new zastoy, one that may last for many years to come.