Is Russia’s economy cracking despite the Iran war windfall?

A widening deficit and Ukrainian strikes are testing Russia’s economy, even as war in the Middle East lifts oil revenue.

Russia’s economy has held up longer than many expected, defying Western sanctions.

But four years into the Russia-Ukraine war, the strain is starting to bite. Growth is forecast to slow to its weakest pace since 2022. The budget deficit is widening. And Ukrainian strikes are reaching deeper into the economy.

Even so, Moscow’s pockets remain deep, with more than $300bn in accessible reserves. The US-Israel war on Iran has handed it a windfall, sending energy prices higher and boosting Moscow’s revenues.

The United States has moved to cut that off, with the US Senate backing tariffs of up to 100 percent on Russian energy buyers.