Russia’s economic outlook is facing new uncertainty as financial and structural pressures intensify. In a recent feature by EFN, Maria Perrotta Berlin shared insights on how mounting constraints are narrowing the Kremlin’s policy options. The article explores how prolonged war spending, inflation risks, and sanctions are creating fresh challenges for President Vladimir Putin.
Maria Perrotta Berlin, Assistant Professor at the Stockholm Institute of Transition Economics (SITE), explained that Russia’s room for maneuver is shrinking. While the economy has shown resilience since the full-scale invasion of Ukraine, she noted that several buffers are weakening. Fiscal reserves are under strain, borrowing costs remain elevated, and inflation continues to pressure households. According to Maria Perrotta Berlin, these trends suggest that policy trade-offs are becoming more difficult and costly.
“You can start to sense a growing concern in the Kremlin. We saw this clearly in the middle of last year when the government presented its new budget. In the 2026 budget, they increased both VAT and corporate taxes and explicitly linked these hikes to the need to finance the war. That was the first time they openly made that connection. It signals that financial resources are becoming increasingly constrained,” said Maria Perrotta Berlin.
Perrotta Berlin also emphasized that economic resilience does not eliminate vulnerability. Instead, it often masks underlying imbalances that surface over time. As EFN reports, the combination of sustained sanctions, restricted capital access, and domestic economic pressures is creating a new phase of uncertainty. These developments raise important questions about Russia’s medium-term stability and its capacity to finance prolonged geopolitical ambitions.
To read the full analysis and Maria Perrotta Berlin’s commentary, access the complete article published by EFN.
Further Reading: Russia’s Wartime Economy and Sanctions Impact
For deeper insight into sanctions on Russia, explore SITE’s report, Financing the Russian War Economy. The study analyzes Russia’s budget deficit, wartime spending, energy revenues, and fiscal sustainability under Western sanctions. It offers data-driven insight into Russia’s war financing capacity and economic vulnerabilities.
For more on sanctions policy and economic pressure tools, visit the SITE Sanctions Hub Evidence Base.
Do Economic Sanctions Work? Evidence and Policy Lessons
The impact of economic sanctions remains debated. Sanctions on Russia have renewed questions about growth, fiscal stability, and war financing.
The FREE Network policy brief, “The Effects of Sanctions,” by Maria Perrotta Berlin, examines when sanctions succeed, their risks, and lessons for future design.
