Is Russia's economy completely fine with the war? Why does it seem like it's indeed getting richer the more it fights?
Your observation is very sharp. 'Getting richer the more it fights' is both a real feeling for many ordinary Russians and an economic 'illusion'.
Simply put, Russia's current economic situation is definitely not 'completely fine'; it's in a state of 'high fever': trading the future fiscal and human reserves of the nation for short-term prosperity.
This 'counter-intuitive' phenomenon is primarily supported by the following core logics:
I. Why does it feel like 'getting richer the more it fights'? (Where does the money come from?)
For many lower-class and lower-middle-class Russian families, the war has indeed brought unprecedented wealth effects in the short term. This is mainly thanks to **'Military Keynesianism':
The state pays out (massive military spending flows back):
High salaries for frontline soldiers: Military salaries plus various subsidies are several times or even ten times the average wage in Russia's remote regions. Large amounts of cash flow directly into originally impoverished families.
Pensions and compensation: Although brutal, high casualty compensation does instantly give some families huge sums of money they could never earn in a lifetime, directly stimulating local consumption (like buying houses, cars).
Crazy 'talent war' leading to soaring wages:
Due to mobilization and population outflow, Russia is experiencing an extremely severe 'labor shortage' (unemployment rate dropped to a historic low of around 2%).
Defense plants offer high salaries to snatch workers to meet deadlines; private companies are forced to raise wages significantly to retain people. The result: paychecks across society are rising.
Prosperity of the military-industrial supply chain:
Tanks, missiles, uniforms, canned food... all industries related to the war are operating 24/7. These companies have endless orders, soaring profits, and workers get substantial overtime pay. This also drives prosperity in upstream and downstream sectors (like steel, logistics).
So, what ordinary people see is: jobs are easy to find, wages are climbing, and the neighbor's son in the military sends back piles of rubles. This feeling of 'having more cash on hand' is very real.
II. Is it really 'fine'? (What is the cost?)
Although people have more money, the Russian economy is suffering serious structural internal injuries, masked by the wartime boom:
Inflation is fierce (money is worth less):
Everyone's wages have risen, but fewer people are producing civilian goods (they're making shells instead). More money, fewer goods, inevitably leads to soaring prices.
While official inflation figures (around 8-9%) might seem acceptable, the price increases for daily necessities (like butter, potatoes, eggs) and imported goods are staggering. People earn more, but things are also outrageously expensive.
It's not just a shortage of people; it's 'no people left':
The labor shortage has reached a bottleneck. Current growth is achieved by 'squeezing existing capacity'; factory machines run 24/7, and people work non-stop. To expand production in the future, there are neither machines nor people.
Many civilian service industries (like delivery, catering, repairs) are seeing a sharp decline in service quality because they can't find workers or afford high wages.
Extremely high interest rates (cutting off future investment):
To curb inflation, the Russian central bank raised the key rate to a terrifying 21% (data from late 2024).
This means ordinary private enterprises dare not borrow to expand. The current prosperity relies entirely on government spending. Once government finances tighten and investment decreases, the private sector cannot take over, and the economy could stall instantly.
'Ineffective' GDP:
Producing a tank counts towards GDP, but when that tank is driven to the front and blown up, it doesn't transform into long-term national wealth (unlike building roads or factories which generate long-term benefits).
This type of growth is called 'consumptive growth', essentially depleting the nation's savings.
III. Summary: It's a 'stimulant shot', not a 'gym membership'.
Russia's current economic situation is like a person taking stimulants (war spending) to run a marathon:
Short-term view: He runs much faster than usual, looks flushed, and is highly energetic (GDP growth, rising wages).
Long-term view: His body is being depleted, heart rate too high (overheating economy). If not maintained with stronger doses, once he stops, the side effects (stagflation, industrial hollowing out) will be very painful.
Conclusion: Russia has not created an economic miracle. Instead, it is spending the resources that should have been used for development over the next decade (oil dollars, national funds, young labor) in a concentrated, explosive manner over this year or two.
As long as the war continues and oil prices don't crash, this illusion of 'prosperity' will likely persist for a while. However, 'getting richer the more it fights' is not only unsustainable but also highly likely to require the entire population to 'pay back the debt' through a long-term decline in living standards in the future.
Have residents' incomes and lives improved?
This is not just your illusion; it's a very typical 'war economy' phenomenon. If you only look at the cash in people's hands, they are indeed 'richer'; but if you look at quality of life and the nation's future, they are actually 'eating into the principal'.
Simply put: 'Macro data is partying, micro life is downgrading, and wealth inequality is being reshuffled.'
We can break down the truth of this 'getting richer the more it fights' from the following dimensions:
Russia is currently undergoing the largest wealth transfer in decades, with beneficiaries very concentrated:
Lower-class families 'trading life for money':
This is the main source of your feeling that 'everyone has money.'
Sky-high recruitment: Previously, in remote impoverished regions (like Buryatia, Dagestan), an ordinary man's monthly salary might have been only 20,000-30,000 rubles. Now, joining the military can bring a signing bonus + monthly salary of 200,000-300,000 rubles or more.
Death compensation: If killed in action, families receive pensions of millions or even tens of millions of rubles. This sum is enough to buy houses and cars in Russia's poor regions. This 'blood money' directly stimulates consumption at the bottom, giving many families who have never seen so much money sudden, strong purchasing power.
Workers in the military-industrial and related sectors:
Defense plants operate 24/7 with double overtime pay and are desperate for workers. To compete for labor, private companies are also forced to raise wages significantly. The result is a surge in nominal wages; people do have more rubles in hand.
Although people have more rubles, the 'cost-performance' of what they can buy and the services they receive is plummeting. This is called **'quality of life inflation':
Consumption downgrade, price upgrade:
Cars: Previously, 2 million rubles could buy a new German or Japanese car; now, that money can only buy more expensive Chinese cars (due to tariffs and logistics costs) or very old used cars. Although many have bought new cars, the cars they drive are actually not as good as before.
Food: Official inflation rates (8-9%) often mask the real price increases for food. Prices for basic foods like butter, cheese, and eggs have skyrocketed. The proportion of income ordinary people spend on 'food' has increased, meaning they are actually becoming poorer.
Service sector collapse:
Difficulty seeing a doctor: Because many doctors have been conscripted or left for private practice/abroad, wait times in public hospitals have lengthened, and medical quality has declined.
No one to do the work: If your pipe breaks or your car breaks down, you might not find anyone to fix it, or the repair cost is exorbitant, because the able-bodied workforce is at the front or in defense plants.
Not everyone feels life is better; the pain is mainly concentrated among originally comfortable groups:
The 'losers' are urban middle-class and civilian government employees:
Teachers, doctors, civil servants (non-power ministries), IT professionals—their wage increases completely fail to keep up with inflation. The days of annual European vacations and buying imported appliances are gone; now their money only maintains basic decency.
Savings devaluation and no access to credit:
To curb inflation, the central bank raised interest rates to a terrifying 21%. This means ordinary people, unless they join the military, basically cannot get loans for houses or cars.
For soldiers, the government offers debt forgiveness (up to 10 million rubles) and preferential loans. This further widens the treatment gap between 'those who serve' and 'those who don't.'
The Russian economy is indeed more 'resilient' than the West predicted, due to:
Deep savings: The sovereign wealth fund (oil dollars) accumulated over the past decade is being sold off in large quantities to pay salaries in rubles.
Oil is still being sold: Despite sanctions, energy exports still bring in hard currency.
Government-led 'false prosperity': As long as the government keeps printing money to pay soldiers and build tanks, GDP data will look good. But these tanks are built only to be blown up; they don't turn into roads, schools, or hospitals. This GDP is an unsustainable 'consumable.'
Summary
The 'getting richer the more it fights' you perceive is essentially the state borrowing against the future to pay the current poor to fight the war.
Short-term view: Lower-class incomes surge, consumption is hot, resembling a prosperous age.
Realistic view: This is a distorted economy of 'high income, high prices, low quality'. If you are an ordinary urban resident living on a fixed salary, or a middle-class person needing quality healthcare and education, your life is actually deteriorating significantly.