Analysts at the Institute for the Study of War (ISW) point out that the Kremlin is extending its information campaign to conceal the extent of the negative impact on the Russian economy due to the war in Ukraine.

Source: ISW

Quote from ISW: "The Kremlin continues to conduct an information campaign likely directed towards both domestic and international audiences that aims to conceal the extent to which Russia's protracted war against Ukraine has negatively affected Russia's economy."

Details: Russian Prime Minister Mikhail Mishustin met with Russian leader Vladimir Putin on 7 February to discuss the state of the Russian economy.

Quote: "Mishustin claimed that Russia's gross domestic product (GDP) rose in 2024 by 4.1 percent largely due to ‘intensive’ growth in Russia's manufacturing industry – likely referring to Russia's boost of its defence industrial base (DIB) since the start of its full-scale invasion of Ukraine in February 2022."

Details:The minister argued that the main contributors to the growth of Russia's manufacturing industry were machine building, transport engineering, automotive, and computer and electronic equipment.

He also stated that inflation in Russia reached 9.52% in 2024, while Putin declared that as of 3 February 2025, inflation was already 9.9%.

Quote: "Russia's true inflation is quite higher than the official statistics the Kremlin is willing to publicise, however (several studies indicate that Russia’s inflation rate is closer to 20%)."

Details:Mishustin emphasised the low unemployment rate in Russia in 2024 at 2.5% but only briefly acknowledged the significant labour shortage in Russia as a reason for Russia's low unemployment rate.

He noted that Russia's economic growth may be less significant in 2025, as it is very important to stop inflation and ensure long-term economic growth.

Quote:"...likely a signal to prepare the Russian population to expect economic hardships in 2025. Mishustin and Putin also attempted to posture Russia's economy as stable in the face of international economic pressure. Mishustin claimed that Russia's fuel and energy complex is adapting and finding new markets."

Details: Mishustin claimed that the Russian economy has "successfully managed" the "unprecedented sanctions pressure" in recent years, and that anti-Russian sanctions are hurting the countries that imposed them more than the sanctions are hurting Russia. Putin has also tried to present the Russian economy as stronger and growing faster than Western economies.

Quote: "Mishustin and Putin notably did not mention how the Russian Central Bank raised the interest rate to 21% in October 2024 or how Russia has been drawing from its National Welfare Fund to finance its war effort over the last three years.

The liquidity portion of Russia’s National Welfare fund may run out by Fall 2025."

To quote the ISW’s Key Takeaways on 7 February:

• Ukrainian forces marginally advanced during mechanised assaults in their salient in Kursk Oblast on 6 February, but Russian sources claimed on 6-7 February that Russian forces have at least temporarily stalled Ukrainian advances southeast of Sudzha.
• The Kremlin continues to conduct an information campaign likely directed towards both domestic and international audiences that aims to conceal the extent to which Russia's protracted war against Ukraine has negatively affected Russia's economy.
• Ukrainian military officials continue to highlight the country’s growing drone production capacity and its effectiveness on the battlefield but acknowledged that Ukraine must address its force generation issues to fully stop Russian advances in eastern Ukraine.
• Interim Syrian Defence Minister Murhaf Abu Qasra stated in an interview with The Washington Post that Syria is open to Russia retaining its air and naval bases in Syria if there are "benefits" for Syria.
• Azerbaijan-Russia relations continue to sour following Russia’s refusal to take full responsibility for the 25 December 2024 downing of an Azerbaijani Airlines (AZAL) passenger plane, likely shot mid-air by Russian air defence before crashing in Aktau, Kazakhstan.
• Ukraine's Cabinet of Ministers appointed Lieutenant General Yevhen Moisiuk and Captain Valerii Churkin as Deputy Defence Ministers on 7 February.
• Russian forces recently advanced near Borova and Toretsk.
• The Russian government continues to use its "Time of Heroes" programme to appoint veterans of the war in Ukraine to regional government positions.

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