Hope springs eternal in the West, especially in the halls of Washington, DC, that Russia’s economy is like a teetering Jenga tower… All that is needed is one more tiny push and the system will collapse. That strategy is guaranteed to fail. Russia’s head of the Central Bank, Elvira Nabiullina, delivered some very bad news for the West yesterday… Russia is doing just fine.

Throughout 2025, Western politicians have portrayed Russia’s economy as increasingly strained by sanctions, high military spending (~7-8% of GDP), falling oil revenues, inflation (~7-9%), and structural imbalances, with growth slowing from 4%+ in 2024 to ~0.6-1.5% projected for 2025–2026. While acknowledging short-term resilience (e.g., via China/India trade rerouting), most view it as unsustainable and vulnerable to further pressure, and believe that inflicting economic pain on Russia will force Putin to negotiate on Ukraine.

Trump officials have been particularly blunt about using Russia’s economic woes as leverage for peace talks:

Treasury Secretary Scott Bessent (multiple 2025 statements, e.g., September NBC interview) described Russia’s economy as “in full collapse” if US-EU impose secondary sanctions/tariffs on oil buyers (China, India). Bessent claimed that tougher measures could “bring Putin to the table” quickly, noting a “race” between Ukraine’s military endurance and Russia’s economic limits.

President Donald Trump (August 2025 remarks) called Russia’s economy “stinks” and “collapsing,” predicting low oil prices ($10/barrel drop) would force Putin to stop the war, as energy funds the conflict.

If Trump is counting on lower oil prices to hurt Russia, he is working against himself with his attacks on Venezuela… The price of oil has increased following Trump’s repeated threats that he will attack Venezuela.

EU leaders also share the vain hope that cumulative sanctions will force Russia to surrender… They are on their 19th package of sanctions:

European Commission President Ursula von der Leyen (multiple packages, e.g., October 19th announcement): Stated EU sanctions are “an effective tool of economic pressure” targeting Russia’s war machine (energy, finance, shadow fleet), with the 19th package (October 2025) designed to “keep turning off the tap” on revenues until Russia negotiates.

High Representative Kaja Kallas (July 18th package): “Each sanction weakens Russia’s ability to wage war… Europe will not back down,” highlighting measures against banks, crypto, and third-country enablers.

German Chancellor Friedrich Merz & others (December talks): Noted Russia’s “overheating” reversal but warned of “permanent scarring,” with some (e.g., Swedish PM Ulf Kristersson) pushing for faster asset seizures/loans to Ukraine, saying “sanctions are biting but pressure must increase.”

Elvira Nabiullina apparently has not got the Western memo. In her follow-up remarks after the Board of Directors’ of the Russian Central Bank cut interest rates on 19 December 2025, Governor Nabiullina delivered a very upbeat speech that described Russia’s economy as transitioning from overheating to a balanced growth path, with inflation cooling faster than anticipated. The Bank of Russia is essentially saying that the anti-inflationary measures implemented in October 2024 to cool the war‑driven boom in the Russian economy have succeeded, because inflation has eased, and that the Bank can continue very carefully lowering interest rates while still keeping prices under control.

She noted that In late 2025, consumer prices stopped rising as fast as before, and some core measures of inflation dropped toward the Bank’s 4% target, helped by a stronger ruble and previously very high interest rates. In addition, Russian wages outpaced inflation, rising an average of 20% in 2025. At the same time, the Bank warns that early 2026 will bring a fresh bump in inflation because VAT is going up and many regulated tariffs (like housing and utilities) are being raised, and that people’s and businesses’ inflation expectations have already moved higher in anticipation.

On the real‑economy side, the Bank describes activity as robust, but less overheated than before. Output and consumer spending are growing, with people bringing forward purchases of things like cars ahead of higher fees, while investment—after several years of record levels—has stopped accelerating and now looks more mixed across sectors. The labor market is slowly loosening: labor shortages are less acute, wage growth is expected to moderate, and part‑time work is rising in some industries, which all point to less pressure from an over‑tight jobs market.

Financial conditions have shifted from extremely tight to just tight. Loan rates have fallen enough that companies, households with mortgages, and car buyers are borrowing more, but deposit rates remain high enough that saving in rubles is still attractive, and more households are also moving money into securities. Externally, export prices are weaker than hoped and sanctions still bite, but the ruble has stayed relatively strong thanks to the fiscal rule, high rates keeping imports down, and import‑substitution policies, all of which help restrain inflation, even if that effect is fading.

Because of this mix, Nabiullina sees more upside than downside risk to inflation over the next year: a still‑tight labor market, higher expectations due to VAT and tariff hikes, uncertain oil prices and geopolitics, and the possibility that credit and money growth flare up again. While endorsing the cut in the key rate to 16%, she stressed that further cuts will be cautious and not automatic, hinging on whether the recent slowdown in inflation proves durable and expectations remain anchored—arguing that only stably low inflation will allow genuinely moderate interest rates and a predictable environment for investment and long‑term growth.

The West continues to believe that it enjoys an advantage over Russia when it comes to defense spending. While it is true that the United States spends vastly more than Russia — the US spends $693,077 per soldier ($901B / 1.3M) compared to Russia, which spends $130,303 per soldier ($172B / 1.32M) — the Russians enjoy a staggering advantage on the battlefield. Russia maintains decisive advantages in certain military domains, particularly in the operational deployment of hypersonic missiles and scaled production of conventional munitions and platforms amid its war economy.

With respect to hypersonic missiles: Russia has fielded an operational class of hypersonic weapons since 2017–2022, including the air-launched Kinzhal (Mach 10), ship/sub-launched Zircon (Mach 9), and the new Oreshnik (Mach 11 IRBM, entering combat service by end-2025), which gives it a strategic edge in deployment quantity and nuclear-capable variants. The US does not have any fully operational hypersonic missiles in service, although programs like the Army’s LRHW (Dark Eagle) reportedly achieved first battery equipping in December 2025 (tests throughout the year) and the Air Force’s HACM completing key trials, aiming for 2026–2027 fielding.

Russia also has significantly outpaced the US in artillery shells, with ~3 million 152mm/155mm equivalents annually (sustained high output in 2025), compared to US/NATO’s goal of ~2 million by end-2025 (current ~1–1.2 million). For artillery barrels, Russia produces ~50–60/year while the US claims it emphasizes quality over quantity (e.g., advanced M777/155mm systems, ~100–200 barrels/year capacity but focused on precision munitions)… This is just a bullshit excuse that US policymakers trot out to cover up the fact that they cannot keep pace with Russia.

On drones, Russia ramped-up to 5,500/month of Russian models by November 2025 (90% domestic parts), surpassing US production (2,000–3,000/month for military UAS, including Switchblade/Reaper variants). For tanks, Russia produces ~1,500–2,000/year (T-72/90 upgrades + new T-14s), far exceeding US output (~200–300 M1 Abrams equivalents annually). In summary, Russia has been able to boost production across the board without having to adopt a war time mobilization. Russia enjoys quantitative edges in the areas outlined above, which enables Russian sustained operations in Ukraine despite sanctions.

Russia has been able to shift its industrial focus to serving defense priorities without forcing deprivations on Russian consumers, while the US brags about its supremacy but cannot actually boost production in key areas, such as artillery shells, in order to supply Ukraine without stripping its own units of capability. This is just one reason that President Putin is under no pressure to make concessions to Donald Trump or NATO.