Russia’s economy is much worse than it seems, and ‘elites are increasingly alarmed’ as alternate GDP gauge shows huge contraction

The Swedish government has come up with some drastically different economic figures on Russia that make the Kremlin’s official data seem like a Potemkin village. In a New York Times op-ed on Wednesday, Foreign Minister Maria Malmer Stenergard cautioned the West against overestimating Russia and said the economy is more fragile than it appears. While Russia has claimed GDP expanded by about 13% between 2020 and 2024, Sweden’s analysis of nighttime luminosity suggests the economy actually shrank by 8% during that span. Moscow has also lowballed inflation substantially, according to Stenergard, who pointed out that Russia’s official inflation figure in 2024 was 10% while the central bank hiked interest rates to 21% that year. Similarly, Sweden’s military intelligence chief has estimated that today’s inflation is likely closer to the current benchmark borrowing cost of 15% than the government’s official reading of 5.2%. “This would mean Russia is overstating its purchasing power, and that its military spending capacity is weaker than it appears,” Stenergard wrote. The U.S.-Israeli war on Iran has given Russia a bit of relief by sending oil prices higher and loosening sanctions—allowing the Kremlin to generate more revenue. But Swedish intelligence believes Russia would need the average price for Urals oil to stay above $100 a barrel for the rest of the year to provide a meaningful benefit to the government’s finances, Stenergard said. Last week, the average Urals price hit $94.87 a barrel, the highest since 2023. If the U.S. and Iran reach a ceasefire agreement that reopens the Strait of Hormuz and lifts sanctions on Iranian oil, then global crude prices will plummet. At the same time, more advanced Ukrainian drones with longer ranges have evaded air defenses and attacked Russian oil export terminals, limiting the gains from higher oil prices. Oil storage tanks on fire with thick black smoke drifting south over the B