The Economic Impact of Russia’s Botched Invasion of Ukraine

Jackson Kang

Russia’s recent conflict with Ukraine has left many in a state of question and fear over the future. Ukraine has shown a surprising resistance against the Russian forces that first infiltrated the sovereign country on February 24th. Russia’s invasion has defied many people’s expectations, and the effects of this mismatch are already evident in Russia’s economy, leaving many to wonder how the Russian and world economy will be impacted in the long term. 

It was originally predicted by the U.S. government that the Ukrainian capital of Kyiv would fall in 96 hours, but the conflict broke into a war that seems to be developing into a stalemate between mismatched sides. Russia has not been as indomitable as expected due to Russian ground forces. Russia’s inability to solidify its grip on Ukraine’s air space has diminished the effectiveness of ground troops, and advancing Russian ground forces have been greatly stalled by the death of Russian general Vitaly Gerasimov, who was generally in charge of the advancing Russian convoy of military vehicles. 

The stalling nature of the war has caused the Russian forces’ morale to drop, and the Russian Defense Ministry has actually admitted that close to 500 Russians have already been killed in the fighting. Russian soldiers, additionally, are troubled by the fact that they were sent to Ukraine under false pretenses: many had been told that they were going to liberate an oppressed population, while, in actuality, these soldiers were sent to provoke a tranquil territory. Despite the extensive military and humanitarian losses that Russia has encountered with its invasion of Ukraine, the economic effects have also put the Russian economy in a dire state and disrupted the flow of the world economy. Russian companies are also being crippled, as many foreign giants are unwilling to cooperate and deal business with Russian companies because they are associated with Russia, and these consequences will worsen as the invasion continues.

Over 150,000 Russian workers were either furloughed or laid off after just the first month of the invasion. and unemployment and inflation are simultaneously skyrocketing–making for a combination that is wearing away at the pillars of the Russian economy. In fact, consumer prices in Russia are expected to rise 20% this year, and the inflation can be attributed to multiple factors: supply has dropped since producers were forced to halt trade and commerce with Russian businesses, and foreign investment has fled Russia, greatly damaging the value of the Russian ruble. Russia generally imports more foreign goods than it exports, and since companies are not willing to sell their products to Russia, its economy has started to break down–its manufacturing centers will not be able to function anywhere close to their full capacity. In addition to Covid-19 greatly slowing economic growth, the sanctions placed on Russia are thought to be the final straw that will leave the Russian economy in shambles.

While the rest of the world will suffer from the breakdown of the Russian economy as they cannot import commodities like oil, the economic implications will not be nearly as crippling as Russia’s. Since European countries will not purchase oil as a deterrent to Russia’s advancement in Eastern Europe, Russia’s trade with the rest of the world will be effectively closed off; Russia’s main source of income is from exports, which will cease to generate any more revenue. 

While trying to seize a democratic country, Russia has stolen the livelihoods of millions of innocent people and has spawned fatal, irreversible damage. What Russia failed to realize in its invasion of Ukraine, however, is that the impacts go both ways. Russia is experiencing massive losses in its military, and its economy is getting destroyed and effectively blacklisted from international trade. The full effects of the economic sanctions will take a long time to fully play out, but the immediate effects are already crippling the Russian economy. The harmful and disastrous consequences that Russia will face are nothing but the product of its own inhumane actions.