EU sanctions bite, but Russia's war economy keeps the show running
After 20 rounds of sanctions, Russia shows economic strain (0.3% Q1 contraction, about $60B deficit, near 6% inflation, and a 14.5% policy rate) but avoids collapse thanks to a high-cost war economy—boosting military spending and relying on domestic funding. Moscow also leans on yuan and sanctions circumvention to prop up finances. The EU pushes for a coordinated ban on maritime services for Russian oil tankers, yet Hormuz disruptions and shadow trading have partly cushioned revenue. IMF projects 1.1% growth in 2026, signaling a two-speed economy where defense-linked sectors thrive even as others lag.