The war in Russia finally posed a big problem in the third year, and now comes the time for Putin to make a tough decision.
With trillions of rubles in defense spending, military-industrial production has been one of the main drivers of Russia’s economic development over the past three years, but has recently unexpectedly fallen into trouble.
According to recent data released by the Russian Federal Statistical Service (Rosstat), Russia's "metal products" production capacity experienced its first negative growth since the start of the war in September, down 1.6% year-on-year.
For comparison, the growth rate in August was 21.2 percent, and the annual growth rate last year and 2023 was 31.6 percent and 26.4 percent, respectively.
Meanwhile, Russia's "other vehicles", including production of tanks and infantry vehicles, slowed its growth rate by more than 10 times - comparable growth rate of only 6% in September compared to 61.2% in August.
The decline in military production has dragged down Russia's overall industrial production: Industry, which accounts for about 30% of Russia's GDP, has almost stopped growing: 0.3% year-on-year in September, compared with 5.6% annualized growth last year. Among them, the manufacturing industry's growth rate of 0.4% in September hit the lowest level since the beginning of 2023.
In contrast, Russia’s energy industry, in turn, has become the “top pillar”, which has achieved growth for the first time in the past six months due to the warming of energy prices, up 1.2%.
Trump has ordered sanctions on Russia’s two largest oil companies, and India also intends to gradually reduce oil imports from Russia.
Orlova, chief economist at Russia's Alpha Bank, believes that the shrinkage problem in the industrial sector is related to government budget restrictions-in other words, Russian manufacturing, which relied on government orders during wartime conditions, is now in a situation of rapid decline in orders.
The next days of the Russian manufacturing industry, especially the military industry, may be harder.The Russian government budget for 2025 is facing the "21% drop in raw material revenue" and "five times the fiscal deficit is expected" two mountains, in order to prevent the economy from exploding completely, the Russian Treasury Ministry will have to cut spending in the fourth quarter (10-12 December) and implement austerity fiscal policy.
In fact, since the second quarter of this year, Russia has gradually entered some sort of "technical recession". private consumption and enterprise investment double decline, retail growth rate slid from 7.2% at the end of last year to 2.4% in April this year, if the inflation factor is deducted, there has been a practical shrinkage, falling more than 7%.
In the past two years, Putin’s administration has claimed that the country’s economy has grown by more than 4 percent annually, more than most Western countries – but those who have little insight into the Russian economy are aware that this prosperity is largely dependent on wartime government orders, on continued growth in military and industrial capacity, and on radical Kremlin fiscal policies.
However, this year, this "prosperity narrative" finally came to an end. The persistence of inflation, the pressure of fiscal deficits and the embarrassing reality of long-term low energy prices have caused Moscow to put the brakes on the economy.
Even now, military production, the last "breathing space" of the Russian economy, has had to slow down significantly, which shows the seriousness of the problem.
In its latest revision in July, the International Monetary Fund (IMF) sharply lowered Russia's full-year growth forecast to 0.9%. Even Russian officials had to lower their original target of 2.5% GDP growth to 1.5%.
Even Trump has seen through the current weakness of the Russian economy.
On September 23rd, he posted a rare negative comment about Russia on social platforms.
He wrote that Russia had delayed the war for three and a half years, but still had no signs of victory — “If Russia was a real military power, this war would not be a week.”
He further pointed out that this conflict did not allow Russia to show its strength, but made it look more like a "paper tiger". Trump claimed that Putin's war machine is drying up, the country's economy is in a severe recession, and that "Russia's economic situation is extremely bad and is heading for collapse".
Trump, who has been described by many netizens as “unreliable”, is not an outspoken argument this time.Both the latest forecasts of the International Monetary Fund (IMF) and the statistics of the domestic financial and industrial sectors in Russia show that economic growth is slowing sharply.
It is precisely because of these realistic data that Trump's "paper tiger" evaluation has changed from an exaggerated rhetoric in political language to a judgment supported by cold facts, making it difficult for Moscow to refute.
Trump knows the truth, and so do the top leaders in Moscow. At the St. Petersburg Economic Forum in June, Russian Minister of Economic Development Reshetnikov bluntly stated that Russia's economy was "on the verge of recession";
Nabiullina, governor of the Russian Central Bank, known as the "financial czar", also said at the same forum that the resources that have provided growth momentum for the Russian economy in the past two years have been "exhausted".
Everyone knows the truth, but how to completely solve the problem is what these people dare not talk about-that is, end the war immediately. Putin is the only person in Russia who can make this difficult decision.
Between war and economy, Putin doesn't have much room for distribution. For the sake of Russia's future, he must make a choice.