Russia is heading towards banking crisis as economy plummets

 A new report suggests that Russia’s economic strength is “misleading” as the country, under heavy Western financial sanctions, edges closer to an economic crisis.

Russia is currently grappling with interest rates of 21% and soaring inflation, but the Kremlin continues to downplay the true impact of Western sanctions, which have primarily targeted Russian oil and gas exports.

Since the start of the war in Ukraine, food prices have surged, while Vladimir Putin has increased defense spending to sustain the war effort.

According to a recent report from the Stockholm Institute of Transition Economics (SITE), Russia’s so-called “war economy” has helped keep the country afloat—although its financial operations remain highly opaque.

“Fiscal numbers in Russia don't really correspond to what we think they are putting into the war effort,” said Torbjörn Becker, head of SITE, in an interview with Reuters.

Becker also warned that Russia could face a banking crisis due to its massive budget deficit combined with escalating military expenditures.