On April 16, policymakers, market experts, industry leaders, and Russian government officials gathered in Moscow for the Moscow Exchange Forum. During the event, the panelists highlighted “evolving priorities shaping Russia’s financial sector,” including Russia’s capital markets, stock markets, market growth, and investors. One of the speakers at the forum was Russian Central Bank Governor Elvira Nabiullina.
During her presentation, Nabiullina warned that the Russian Federation could face unprecedented labor shortages. She noted that production costs have increased and that Russia’s overheated economy is driving inflation. Nabiullina added that the Russian Federation is “facing a persistent downturn in external conditions affecting both exports and imports.”
The Russian Central Bank Governor is not the only senior Russian official to issue warnings about the Russian economy. During his annual year-end press conference in December 2025, Russian President Vladimir Putin acknowledged that Russia is experiencing an economic slowdown. Similarly, while speaking at an economic conference in St. Petersburg in June 2025, Russian Minister of Economic Development Maxim Reshetnikov warned that Russia was “on the brink of falling into a recession.”
As the Russian Federation faces these economic challenges, The Moscow Times reported on April 15 that Putin has called on members of the Russian government and the Central Bank to explain why Russia’s economy is underperforming in 2026. The World Bank and the International Monetary Fund have forecast that Russia’s gross domestic product will only grow around 1% in 2026. This would be similar to the World Bank’s reporting on Russia’s GDP growth in 2025, which only increased by 0.9%. It is also a decline from 2023 and 2024, when the World Bank reported that the Russian GDP grew by 4% in both years.
Russia’s Economic Woes During The War In Ukraine
The comments made by Nabiullina, Putin, and Reshetnikov about the Russian economy suggest that international sanctions have had an effect on the Russian Federation. When Russia launched its full-scale invasion of Ukraine in February 2022, countries around the world came together to impose penalties on Russia. Since then, the Atlantic Council’s Russia sanctions database has estimated that the Russian Federation has lost tens of billions of dollars due to economic sanctions implemented by the international community. Hundreds of Russian oligarchs, politicians, business owners, and companies have been sanctioned. In addition, Yale University has reported that more than 1,000 international companies have suspended or terminated their operations in Russia, further impacting the Russian economy.
“Sanctions [have] not destroy[ed] the Russian economy, but they have accelerated a long-term technological and financial decline, heightened by brain drain among the educated workforce,” Uriel Epshtein, the Chief Executive Officer of the Renew Democracy Initiative, an advocacy organization that also publishes The Next Move, told me in an interview. He added that, due to these international sanctions, Russia remains “cut off from many of the networks that power modern economic growth.”
The Impact Of The Russia-Ukraine War On Russian Civil Society
Aside from these economic challenges, Russia’s ongoing full-scale invasion of Ukraine has also affected the Russian workforce and civil society. According to a Carnegie Endowment report, the Russian Federation has experienced labor shortages, with industrial facilities operating at only 81%. The Carnegie Endowment publication adds that 73% of enterprises in Russia have reported labor shortages. Additionally, a Reuters report in February stated that Russian authorities estimate the country needs 2.3 million workers to address these labor shortages.
The conscription of Russian men into the Russian military to fight in Ukraine is partially why there has been a decline in the number of workers at Russian factories and businesses. According to a report by The National Interest in October 2025, the Russian military has undergone multiple conscription cycles since the start of the war in February 2022. Throughout Russia’s full-scale invasion, hundreds of thousands of men have been conscripted to fight in the Russian military. The departure of young working men from industrial factories, enterprises, businesses, and other sectors across Russia has led to these labor shortages.
Many of the Russians who return from the war are also unable to come back to work, as their injuries sustained during the war have prevented them from working. According to a report by the Center of European Policy Analysis in January 2025, tens of thousands of Russian soldiers are amputees. Casualties sustained by the Russian Federation during the war have further impacted the Russian workforce. According to a report published by the UK Defence Journal in February, Russia has sustained roughly 1.3 million casualties during the Russia-Ukraine War.
But the loss of Russian lives is not the only factor that has impacted the Russian workforce. According to a Newsweek report published in October 2023, approximately one million Russians have moved abroad since the start of the full-scale invasion of Ukraine in 2022. This has further added to the stresses of the Russian labor market. In other words, the casualties sustained by the Russian Federation during the war, as well as the departure of roughly one million Russian citizens, have accounted for approximately 2.3 million individuals. This is the same figure that Reuters reported is necessary to fill the current void in the Russian labor market.
“Russia has already burned through a generation of workers, engineers, and young men who would normally power its economy,” Epshtein told me while discussing the impact of the Russian invasion of Ukraine on Russia’s labor force. “Many [Russian men] have been killed. Many more have fled to other countries to evade the draft. The result will be a hollowed-out labor force, declining productivity, and a social burden of hundreds of thousands of wounded veterans.”
Political Challenges In Russia During The War In Ukraine
Finally, Russia’s ongoing full-scale invasion of Ukraine has impacted the political situation within the Russian Federation. During the war, the Russian government has cracked down on members of the Russian opposition as well as citizens who have protested the war. According to a report by Radio Free Europe/Radio Liberty in October 2025, “numerous critics of the war are behind bars.” Additionally, many prominent figures of the Russian opposition are in exile as they have been repressed by the Russian government.
“Right now, many Russians who would like to part with the regime have nowhere to go, and Putin retains a hold on them by presenting the war as a conflict between Moscow and the West,” Garry Kasparov, the Chairman of the Renew Democracy Initiative, Russian political dissident, and the former World Chess Champion, told me in an interview. “We can show those Russian people who want to break with Putin that there is a place for them in the Free World if they commit to certain conditions, namely signing a declaration affirming that the Putin regime is illegitimate, the war is criminal, and Crimea is a part of Ukraine. This could accelerate the flight of educated and affluent individuals from Russia and weaken the regime via brain drain, while compelling Russians to pick a side. The Russians who leave on this basis can form the foundation of a future free Russia—a pool of talent and integrity to rebuild their country.”
Finally, despite the economic and social impacts of the Russian invasion of Ukraine on the Russian Federation, a survey conducted by the Levada Center in February found that a large majority of Russian citizens continue to support the war in Ukraine. The study found that 72% of survey respondents said they still support the actions of the Russian armed forces in Ukraine. The survey also found that 57% of participants said that strikes on Ukraine’s energy infrastructure were justified. However, it should be noted that 67% of respondents in the Levada survey added that peace negotiations should begin.
The responses provided in this Levada study suggest that, to this day, the majority of Russian citizens still support Russia’s ongoing full-scale invasion of Ukraine. These survey responses also suggest that the political situation in Russia is complex, as citizens support their government’s actions. This has made the political situation in Russia more difficult for the Russian opposition movement as well as opponents of the war in Ukraine, where they have called for political changes as they seek to challenge Putin.
“In the past, major political change has only come to Russia after military defeats—after 1856, 1905, 1917, and 1989, for example,” Kasparov told me. “Before we discuss any specific institutional changes, the Russian nation needs to be cured of its imperial appetite. The only way to achieve that is a Ukrainian victory. If Russia loses in Ukraine—the country it sees as the cornerstone of its former empire—this is the best chance for freedom in both nations.” Kasparov also reiterated the need for a Ukrainian victory while speaking at the Renew Democracy Initiative’s annual gala on April 17 in New York City.
No one is certain how or when Russia’s full-scale invasion of Ukraine will end. But one thing is certain. The ongoing war has posed significant economic, civil, and political challenges to the Russian Federation, and they will worsen as the war continues. They will also take time to address once the war ends. Nevertheless, the effects of the ongoing invasion are not a temporary situation, but rather, these consequences will be felt for generations to come. Observers of the Russia-Ukraine War and experts on Russian affairs will be curious to see how conditions within the Russian Federation develop as the full-scale invasion of Ukraine continues.
