Russia

• Russia’s future growth depends more on productivity, innovation, and stronger institutions than on accumulating labor and capital.
• Russia faces structural development challenges including state dominance, weak competition, skills shortages, and limited global integration.
• International sanctions and war-related restrictions have intensified uncertainty despite resilient output supported by military spending.
• Inflation, ruble weakness, and supply disruptions are creating disproportionate hardship for lower-income households in Russia.

Russia’s future growth depends more on productivity, innovation, and stronger institutions than on more labor and capital. Key challenges include a larger state role, weak competition, skills gaps, and poor global links. More than two years into the conflict, output has stayed resilient, helped by military spending and labor shifts. But inflation, ruble weakness, and supply chain strain are raising risks. Lower income households face the hardest pressure.