Russia’s budget picture is uneasy, with a widening deficit tied closely to defense and security spending. In 2022, defense outlays accounted for a large share of the state budget, roughly a third, fueling the military effort across Ukraine and supporting Moscow’s control over occupied areas. The government’s figures put the net deficit for the year at around 42 billion euros, a level that ranks among the deepest deficits seen in recent history and well above pre-pandemic norms. Public data show that defense spending rose steadily after 2019, growing from about 230 billion euros to roughly 305 billion euros in 2021, with continued emphasis on armed forces near the Ukrainian border in the current period.
Meanwhile, the Kremlin’s heavy focus on the Ukrainian front has not translated into uniform improvements elsewhere. Across Russia, there is a sense that infrastructure—inside major cities and in rural regions alike—needs a facelift. The south and Siberia are frequently cited as areas where transport and public services lag behind the rest of the country. In Moscow and St. Petersburg, mass transit and road networks compare favorably with Western cities, yet in North Ossetia, in the Caucasus, many residents report slow, unreliable services. Local officials say they want better outcomes, but the daily reality shows a slower pace of reform, with marshrutkas—small, shared minibuses—remaining the most common means of travel in several areas and aging fleets in need of renewal.
The economic squeeze has touched ordinary households as well. A sizeable portion of Russians have felt higher prices for essentials, and recent surveys indicate that a large share of the population faces financial strain in everyday life. Analysts note that wages and purchasing power have struggled to keep pace with rising costs, contributing to a broader sense of economic uncertainty.
goose laying golden eggs
The long-term driver of Russia’s public finances remains its energy sector. For decades, hydrocarbons have underpinned the state economy, making Moscow a key energy supplier to many European and regional partners. While several European buyers have tightened ties or sought alternatives since the conflict began, some buyers—India, Turkey, and China among them—have increased their purchases. In 2022, oil and natural gas revenues represented a substantial portion of state income, underscoring the importance of fossil fuels to the war economy. Policy and market dynamics pushed total energy revenue higher, while overall spending also rose, reflecting continued military and domestic needs.
Russia’s broader economic challenges extend to tourism and consumer mobility. Official figures show that foreign visitation fell sharply after sanctions and airspace restrictions, with only a fraction of pre-crisis visitors returning in the subsequent year. The closure of international air routes, higher travel costs, and payments friction—such as restrictions on card use for cross-border transactions—have dampened travel and tourism, limiting one of the country’s non-energy income streams. These tensions illustrate how external pressures interact with domestic priorities, shaping economic resilience in a way that resonates with observers across North America and beyond.
Ultimately, observers highlight a common theme: long-term stability for any nation depends on balancing defense outlays with productive investment in people, infrastructure, and diversified growth. For policymakers, the challenge remains to translate the energy windfall into durable, non-military development while managing public expectations in a shifting global context. Hence, the current economic narrative emphasizes both the security dimension and the broader health of the economy, including how ordinary families cope with price changes, how regions like the Caucasus and Siberia are connected, and how energy markets influence state capacity.