In 2024, according to official Russian data—if it can be trusted—the economy grew by 4.3%, outperforming all G7 nations. The UK managed just 1.1%, while the U.S. posted 2.8%.

This growth was largely driven by the Kremlin’s record military spending.

Russian oil exports remained relatively stable in volume as Moscow redirected shipments from Europe toward China and India. A fleet of hard-to-trace "shadow" tankers helped skirt sanctions from other countries.

Meanwhile, the ruble staged a dramatic recovery to become the world’s best-performing currency this year, gaining over 40%, according to Bank of America.

But as 2026 approaches, the broader tone is shifting.

Mounting Pressures

Inflation remains stubbornly high, interest rates have surged to 20%, and firms face an acute labor shortage. Globally, oil prices had declined earlier this year before being driven back up by the ongoing Israel-Iran conflict.

On Thursday, Russia’s economy minister warned that the country is "on the verge of recession" following a phase of "overheated economic activity," while some observers see signs of a looming collapse.

“Absolute Lies”?

But how realistic are these predictions—and what might they mean for the war?

Evgeny Nadorshin, a Moscow-based economist, told the BBC: "Broadly, it’s going to be an uncomfortable period through the end of 2026. We’ll certainly see some defaults and bankruptcies."

Still, he expects a "moderate" slowdown and calls talk of an outright collapse "an absolute lie."

"There’s no question," he added, "that the Russian economy has endured deeper recessions before."

Nadorshin points out that unemployment is at a historic low of 2.3%, and he expects it to peak at just 3.5% next year. For comparison, the UK’s unemployment rate was 4.6% in April.

Inflation and Labor Woes

Nevertheless, Nadorshin and others note growing areas of concern. Russia now appears to be entering a period of prolonged economic stagnation.

Inflation hit 9.9% year-on-year through April, driven in part by Western sanctions that raised import prices and by labor shortages that fueled wage hikes.

Russia’s Higher School of Economics estimates that by the end of 2024, the country lacked 2.6 million workers—mostly due to conscription and mass emigration.

In response, the central bank hiked interest rates to record highs to curb inflation. But this has made borrowing for investment increasingly difficult.

Energy Revenues Falling

At the same time, Russia’s oil and gas revenues have slumped under sanctions and lower global prices, falling 35% year-on-year in May, according to official data.

This has widened the budget deficit and forced the government to cut back on infrastructure and public service spending.

“They’ve got a massive military budget that’s untouchable,” said András Tóth-Czifra, a political analyst on Russian affairs. “So they’re redirecting money from crucial projects—roads, railways, utilities. And the quality of those services is already declining sharply.”

Tóth-Czifra notes that while Russia may have adapted to Western sanctions more than many anticipated, the long-term costs remain steep.

Russian companies struggle to import the technology they need. The auto industry is still reeling. And the EU has banned Russian coal imports and is phasing out its reliance on Russian gas by 2027.

"None of this will stop Russia from continuing the war in the short term," he added. "But it does constrain their economic capacity to grow or diversify in the long run."

Kremlin Response: “Macroeconomic Stability Is Obvious”

So far, Russian leadership has downplayed these risks. In early June, Kremlin spokesman Dmitry Peskov claimed that the economy’s "macroeconomic stability" and "core strength" were "obvious to everyone."

In April, he said Russia’s economy was "developing very successfully" thanks to government policies.

What Comes Next?

The outlook remains murky.

Should Russia and Ukraine reach a peace deal this year—a possibility that’s not off the table—it could ease some pressure on Moscow. Former President Donald Trump has said he would seek to normalize ties and even pursue new economic partnerships.

However, according to Dr. Katya Yafimova of the Oxford Institute for Energy Studies, Europe is unlikely to ease sanctions even if a peace deal is reached.

"Even if sanctions are lifted, Europe isn’t going back to Russian energy like before 2022," she said, "though some limited gas imports might resume."

Still, she concluded, "the economic picture on the horizon for Moscow is not bright. Re-routing oil exports away from Europe was one thing—but gas is far more complex."

Bottom Line: Regardless of how the war unfolds, its long-term economic toll on Russia is increasingly clear—and the Kremlin’s options for reversing it are narrowing.

US equity indices rose on Thursday after the release of employment figures that significantly exceeded analysts’ expectations.

Data from the Bureau of Labor Statistics showed that the US economy added around 147,000 jobs in June, well above the 110,000 forecast by Dow Jones. May’s figure was also revised upward to 144,000.

In a separate report, initial jobless claims fell by 4,000 to 233,000 for the week ending June 28 — the lowest level since May 17. Analysts had expected an increase to 240,000.

Following the strong jobs data, the yield on the 2-year US Treasury — which is highly sensitive to changes in monetary policy — rose by 8.3 basis points to 3.872% as of 4:27 p.m. Mecca time. The 10-year yield climbed by 4.3 basis points to 4.336%, after touching 4.364%, while the 30-year yield rose by 2.6 basis points to 4.849%.

Wall Street will close early today ahead of the Independence Day holiday, with US markets shut on Friday.

As for trading activity, the Dow Jones Industrial Average rose by 0.8% (375 points) to 44,855 as of 16:09 GMT. The broader S\&P 500 gained 0.8% (51 points) to 6,278, while the Nasdaq Composite climbed 0.9% (198 points) to 20,590.

Copper prices declined on Thursday as some traders and investment funds moved to take profits from long positions ahead of the US employment report, which is expected to influence the path of interest rates and the direction of the dollar.

The benchmark three-month copper contract on the London Metal Exchange (LME) fell 0.2% to $9,994 per metric ton by 10:32 GMT, retreating from Wednesday’s three-month high of $10,020.50.

Traders reported reduced market activity amid investor caution ahead of the June US non-farm payrolls report, which is expected to show a slight uptick in unemployment.

Weaker jobs data could raise concerns over a slowing US economy, potentially giving the Federal Reserve room to begin cutting interest rates — a scenario that would likely weigh on the dollar.

A softer dollar is typically supportive for industrial metal prices, as it makes dollar-denominated commodities cheaper for buyers using other currencies.

Copper is also being affected by an ongoing US investigation into potential tariffs on copper imports, which are widely used in the power and construction sectors. Any new tariffs could tighten supply and drive prices higher on US-based COMEX futures.

The price premium between COMEX copper and LME copper has widened to around $1,300 per ton, incentivizing producers and traders to redirect shipments to the US over other markets.

"While US copper imports haven't yet been hit by tariffs, the market is already pricing in that risk," said Tom Price, analyst at Liberum.

Most copper shipments headed for the US are being pulled from LME-registered warehouses. Copper inventories in the LME system have fallen 65% since peaking in February 2025, now standing at 94,325 tons.

Cancelled warrants — metal scheduled for withdrawal from warehouses — currently account for 34% of inventory, or around 31,900 tons, awaiting shipment.

However, recent data suggests that the spread between the spot copper price and the three-month forward contract is beginning to attract new inflows into the LME.

At Gwangyang port in South Korea, LME warehouse stocks rose by 2,250 tons this week, while stocks in Kaohsiung, Taiwan increased by 1,250 tons.

Other metals

Aluminum fell 0.4% to $2,609 per ton

Zinc dropped 0.3% to $2,749

Lead rose 0.4% to $2,068

Tin slipped 0.2% to $33,655

Nickel gained 0.7% to $15,405 per ton

Meanwhile, the US dollar index rose 0.4% to 97.1 by 15:46 GMT, reaching a session high of 97.4 and a low of 96.6.

In US trading, copper futures for September delivery fell 0.8% to $5.15 per pound by 15:46 GMT.

Bitcoin continued its rise on Thursday, extending gains from the previous session amid new signs of progress in US trade relations, despite ongoing trader caution ahead of a series of important US economic data releases later in the day.

The world’s largest cryptocurrency appeared to have broken out of its trading range between $103,000 and $108,000 on Wednesday, though it remains uncertain whether this price breakout will sustain.

Bitcoin rose 2.3% to $109,613.8 by 05:15 GMT. Broader cryptocurrency prices also gained amid improved risk appetite. Strong gains in US markets overnight — with the S&P 500 reaching a new record high — helped boost sentiment.

Trade optimism boosts Bitcoin

Bitcoin benefited from improved risk appetite following the announcement of a US-Vietnam trade deal, Washington’s third agreement ahead of the July 9 tariff deadline.

Markets were also encouraged by Washington’s easing of some chip export restrictions to China after an initial trade agreement was reached in June.

This trade progress raised investor hopes for more US trade deals before next week’s deadline. US officials said a deal with India is close, though talks with Japan and South Korea have faced setbacks.

President Donald Trump hinted he does not plan to extend the July 9 deadline, after which higher tariffs will be imposed on several major trading partners.

Tax bill and jobs report in focus

Attention also centered on the massive tax bill in Congress, which Trump said the House would vote on later Thursday. However, reports indicate the bill is still under study and discussion in the House.

Preliminary votes show at least five Republicans oppose the bill, potentially jeopardizing its passage.

Key concerns relate to the bill’s potential impact on national debt and the country’s fiscal health, with critics warning it could increase economic risks in the US.

A series of US labor market data will be released later Thursday, most notably the June nonfarm payrolls report. Expectations of Federal Reserve rate cuts are rising, with any strong signals of labor market slowdown likely to increase chances of monetary easing.

Does eurozone money supply growth support Bitcoin’s rise?

While it is difficult to pinpoint a single driver for Bitcoin’s rise on Wednesday, the broad money supply (M2) in the eurozone reaching a record high in April likely played a significant role. Data released Monday showed 2.7% year-on-year growth, aligning with the US’s expanding monetary base.

Meanwhile, ADP data showed US private sector jobs declined by 33,000 in June.

Some market participants view weak demand for leveraged Bitcoin positions as reflecting rising recession fears, especially amid escalating global trade tensions. Trump threatened to raise tariffs on Japanese goods above 30% if no deal is reached by July 9.

In this context, eurozone ambassadors asked EU Trade Commissioner Maroš Šefčovič to take a tougher stance during his Washington visit this week, according to the Financial Times. Some European capitals have called for lowering the current 10% mutual tariffs, despite ongoing internal disagreements over the merits of retaliation.

Options markets and China demand indicators show waning enthusiasm

To gauge derivative market weakness, Bitcoin options markets are instructive. If traders expect a sharp drop, the 25% delta skew rises above 6% as demand for put options exceeds call options.

Currently, this indicator stands at 0%, unchanged from two days ago, indicating the market sees balanced odds of upward or downward moves. While reflecting subdued sentiment at the \$109,000 level, this is an improvement from the pessimism recorded on June 22.

Despite Bitcoin reaching a three-week high, investor appetite in China has sharply declined, according to stablecoin demand indices.

The current 1% discount on Tether (USDT) versus the US dollar in China — the deepest since mid-May — reflects fading confidence in Bitcoin’s recent gains.

Trader concerns over ongoing trade war fallout have increased, especially after Bitcoin exchange-traded funds (ETFs) saw net outflows of \$342 million on Tuesday. Weak derivative market activity mirrors broader economic uncertainty.