Kremlin Insists Russia's Economy Is Stable as Strains in the War Model Surface

The Kremlin said there was no reason to doubt the stability of Russia's economy, its spokesman Dmitry Peskov asserted, pointing to a rising share of non-oil and non-gas revenue in the federal budget, according to RIA Novosti and the financial channel Bankrollo.

The emphasis on revenue away from energy is itself revealing. With oil prices falling and Western sanctions limiting exports, Moscow has relied on taxation, domestic demand and military production to sustain output. Peskov separately argued that it is the United States economy that is being militarized, TASS reported, citing a planned meeting between President Donald Trump and weapons manufacturers.

Independent analysts have described a different situation inside Russia, with business incomes under pressure and localized fuel shortages emerging in some regions. The model that sustained wartime growth, a combination of recovering demand and rising prices, is showing signs of reaching its limits.

From a sound-money view, an economy increasingly organized around state military spending and protected by capital controls can report growth while accumulating distortions. Resources directed into weapons and away from productive investment create imbalances that become visible once the stimulus ends.