Former Central Bank Vice President Vjugin on the Russian Elite: 'These People Are Not Suicidal'

Russia's economy has taken a significant downturn, moving from a state of minimal growth to a worsening condition, according to former central bank vice-president Oleg Vjugin. He described the situation as a seven on a scale of ten, compared to a five a year ago.

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The economy is of course not dying. It has only worsened.

"The economy is of course not dying. It has only worsened," Vjugin stated, explaining that resources for growth are now scarce. He noted that without cuts to military expenditures, significant economic expansion is unlikely. Official forecasts for 2026 predict a mere 0.4% growth, a figure Vjugin views as indicative of real dynamics, though he questions the absolute numbers due to calculation uncertainties.

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For growth, the resources are now missing. If one does not cut military spending, there is no growth in sight.

He elaborated that initial wartime economic resilience was bolstered by drawing on reserves, including funds from the welfare fund and windfall oil revenues. Material stockpiles, particularly in defense, were also depleted. Now, new funding for the front lines must be extracted from the civilian economy through taxes. This has led to a drop in investment and increased financial strain on businesses, as high interest rates erode profits. Consumer spending is also declining, a problem now widely acknowledged.

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Now the reserves are simply exhausted. New funds for the front must therefore be withdrawn from the civilian economy with taxes.

Vjugin confirmed that Western sanctions are having a tangible effect, primarily by increasing logistics costs and driving up prices for imported goods. He believes the economic situation will continue to deteriorate unless military spending is reduced.

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Yes, they have. For one thing, logistics became more expensive. Imported goods are therefore i