Kathrine Frich
The Kremlin insisted sanctions would never seriously damage the Russian economy.
State television continued projecting an image of stability while officials claimed the country had successfully adapted to wartime pressure.
But economists, intelligence officials and even figures inside Russia’s political system are now warning that the situation may be far worse than Moscow admits publicly.
Growing problems
According to reports cited by Puls Biznesu and Money.pl, Russia’s economy shrank slightly during the first months of 2026, marking the first contraction in more than two years.
Economist Anders Olofsgård of Stockholm University said the country is facing its most serious economic moment since the invasion of Ukraine began.
“The Russian economy is in very poor shape. In terms of economic development and systemic stability, the situation is more serious today than at any time since the attack on Ukraine,” he said.
Ordinary Russians are also beginning to feel the pressure in daily life as inflation and cuts in public spending intensify.
Hidden numbers
Western intelligence officials have questioned the reliability of economic statistics published by the Kremlin.
Thomas Nilsson, head of Swedish military intelligence, believes Russian authorities are manipulating macroeconomic data to hide the real scale of the crisis and convince the West that sanctions are failing.
According to the report, officials may be understating inflation while concealing major problems inside the state budget.
War economy
Analysts say Russia’s current economic growth relies heavily on weapons production tied to the war in Ukraine.
But military production alone is failing to create long-term economic value because equipment sent to the battlefield is quickly destroyed.
Nilsson warned that Russia now depends on extremely high oil prices to stabilize its finances, while corruption and dependence on state loans continue weakening the defense sector.
Fear inside Russia
The Kremlin has also started cutting social spending, threatening the long-standing arrangement under Vladimir Putin in which many Russians accepted fewer political freedoms in exchange for economic stability.
Concern about the situation is now spreading inside Russia itself.
Communist Party leader Gennady Zyuganov recently warned parliament that failing to act could lead to “a repeat of the 1917 revolution in the fall.”
Swedish intelligence analysts now believe Russia faces either prolonged stagnation or a sudden economic collapse as pressure on the system continues growing.
Sources: Puls Biznesu, Swedish military intelligence, money.pl
