#russia-economy

#russia-economy

Russia plans to raise tax to fund its defence budget as oil revenues decline. Despite Western sanctions, Russia's military spending has fuelled its war economy. Three years into the war in Ukraine, growth is stalling, energy revenues are plunging, and the budget deficit is widening. To shore up state coffers, Russia is raising the value-added tax from 20 percent to 22 percent, among other measures.

One major drag is Russia's exorbitantly high interest rate, currently 21%, which is choking off private investment. The auto industry and mechanical engineering sectors are particularly hard hit.