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A war economy that drains civilian resources

Russia has redirected a growing portion of its economy toward military production. Factories have been repurposed, workers mobilized for the defense industries, and government budgets massively redirected toward military spending—according to some estimates, Russia will devote more than 35% of its federal budget to defense and security in 2026. This mobilization keeps macroeconomic statistics afloat—Russia’s GDP shows nominal growth fueled by military spending. But this growth is an illusion: it does not produce goods that improve the standard of living for Russian citizens.

The result is wartime stagflation: an economy that appears to be growing according to official indicators, but where citizens see their real purchasing power decline, public services deteriorate, and long-term economic prospects dim. This is precisely the reality described by the 66% of Russians who report facing financial hardship in their daily lives.

Mobilized or Departed Workers

The partial mobilization of September 2022 and the ongoing enlistment of new soldiers have removed hundreds of thousands of active workers from the civilian economy—mostly men of working age, often from skilled sectors. At the same time, the mass emigration of skilled Russians—estimated at more than 500,000 to 1 million people since 2022, including a disproportionate number of engineers, technology developers, and independent professionals—has created a shortage of skilled labor in the civilian sectors of the economy.

This dual pressure—mobilization to the front lines and emigration abroad—is creating tensions in a labor market that, paradoxically, has very low unemployment (because many jobs are no longer being filled) but declining productivity and deteriorating services. For civilian companies trying to operate normally, the shortage of skilled personnel is a growing constraint that weighs on their competitiveness and their ability to maintain operations.


Russia has lost perhaps a million of its best and brightest since 2022. These people will likely never return. This is a demographic and intellectual drain that decades of Russian public education have paid for, and that Putin has squandered in a matter of months. It is a long-term national catastrophe that is not yet reflected in current statistics.

This content was created with the help of AI.

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