Think tank predicts major issues for Russian economy in 2025

This is stated by the Institute for the Study of War (ISW) think tank, Ukrinform reports.

As noted, the Kremlin recently undertook several steps aimed at reducing government spending on the treatment of wounded Russian servicemen, fighting inflation, and solving long-term demographic issues such as low birth rates and labor shortages.

"These policies demonstrate that the Russian economy is not as resilient to Western sanctions, monetary constraints, and the cost of the war effort as the Russian government postures. These policies also demonstrate that the Kremlin will not be able to sustain the protracted war effort for years and decades to come while shielding Russian society from economic challenges. Consistent Western and international support for Ukraine's resistance on the battlefield will further exacerbate Russia's economic problems," ISW analysts believe.

The report also notes that Putin has reduced compensation pledged to Russian servicemen wounded in action on the Ukrainian battlefields,  a clear indication that the Kremlin is trying to reduce the rising short-term and long-term costs of the war and restore balance to the Russian economy.

ISW points out that financial incentives have been a key element of the military recruitment drive and personnel retention efforts for the past nearly three years, so the reversal of such incentives indicates that "the system is becoming economically unsustainable for the Kremlin".

As Ukrinform reported earlier, the European Union is working on the fifteenth package of sanctions against Russia, which will strengthen measures against the circumvention of restrictions with the aim of isolating Russian industry from imports.