Vladimir Putin could face economic ruin in the next year as the Russian economy is poised to completely run out of cash reserves.
After invading Ukraine in 2022, the West hit Russia with significant sanctions to punish Moscow for its aggression.
But, the Russian economy has surprised many with how well it seems to have weathered the storm of financial penalties.
In 2023, Russia’s GDP rose more than any other G7 country. The IMF has also revised its GDP growth forecast for Russia to 2.6 percent this year, a 1.5 percent boost when compared to what it had initially predicted.
Earlier this month, Putin told an audience in Tula: “They predicted decline, failure, collapse – that we would stand back, give up, or fall apart. It makes you want to show [them] a well-known gesture, but I won’t do that, there are a lot of ladies here.
READ MORE: Russia’s economy tipped to hit crisis point when Ukraine war ends
“They won’t succeed! Our economy is growing, unlike theirs.”
But Owen Matthews, an expert on Russia and author of books including ‘Overreach: The Inside Story of Putin and Russia’s War Against Ukraine’, points out one key issue that could come back to bite Putin.
Writing for The Spectator, he warned that Russia’s economy has a “bleak future” because the country is running a deficit that will see its cash reserves rapidly deplete.
Matthews said that Russia’s National Wealth Fund boasted $14 billion of reserves in July 2022, but this is now down to $56 billion as of the end of 2023.
He added: “At the current burn rate of $4.4 billion a month, those reserves will be gone in little over a year.”
This also comes after Putin vowed to improve living standards in his State of the Union address.
However, some experts have highlighted issues that could prevent the Russian President from doing so.
They told Bloomberg that the plans would cost Moscow at least $130billion, something it may not be able to afford later down the line.
Dmitry Polevoy, an investment director at London-based Astra Asset Management, told the outlet: “At first glance, it doesn’t look unaffordable, although if the economic situation is worse than officials forecast, that will require a search for additional sources of financing.”
