Putin's Economic Policies: A Dangerous Heatwave in Russia

Inflation in Russia is accelerating, reaching 7.5% in November, as the country's economy dangerously overheats. While the weakening ruble caused inflation in 2022, this time it is driven by soaring government spending on defense and welfare payments as Vladimir Putin tries to defeat Ukraine. The Russian economy, already suffering from a reduced supply side due to worker emigration and foreign investor withdrawals, is now facing higher prices for raw materials, capital, and labor. Despite raising interest rates, the central bank is concerned about losing control, as Putin's desire to win in Ukraine may lead to even greater spending and faster inflation.