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Vladimir Putin faces economic challenges and potential mobilization as Russia navigates a war of attrition against Ukraine

Vladimir Putin is struggling to manage a stagnating Russian economy characterized by stubborn inflation and a growing labor shortage. While the administration announced a 1 percent GDP growth for 2025, the country faces a significant budget deficit and high costs of servicing public debt. Ukrainian drone strikes have further impacted infrastructure, causing gasoline shortages and disrupting e-commerce. Economists suggest that Vladimir Putin is in a position of 'Zugzwang,' where every available move may lead to a less favorable outcome. While the administration announced that oil and gas revenues have helped finance the war until at least next spring, the lack of technological advancement in the Russian arms industry compared to Ukraine's drone technology remains a concern. As the September Duma elections approach, Vladimir Putin is expected to prioritize quality-of-life issues for citizens. However, the risk of a new military mobilization remains high, which could trigger a stampede of skilled workers leaving the country. To avoid this, Vladimir Putin may rely on the administration's current fiscal policy, which risks higher inflation or a financial crisis if not managed carefully.

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