The economy will hold, but we will come to a social crisis when no one expects it” — the report after which VEB.RF’s chief economist was fired

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“The economy will hold, but we will come to a social crisis when no one expects it” — the report after which the chief economist of “VEB.RF” was fired

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On August 16, the state development corporation “VEB.RF” fired its chief economist Andrei Klepach. Two days earlier, The Moscow Times published excerpts from a report on the state of the Russian economy that Klepach had delivered back in May at a meeting of the Nikitsky Club. The Insider studied the text of the report and selected the key points from it.

🔷Western sanctions imposed because of the attack on Ukraine have severed the integration ties between Russia and the European Union.

“The structure of Russian exports and imports already indicates an extremely high degree of dependence on China, in many ways higher than the previous dependence on the European Union. The only question is how far we will comply with one or another of China’s regulatory requirements and allow Chinese business to control various sectors of the Russian economy.”

🔷Military spending gave an impulse to GDP growth and contributed to a substantial increase in the real incomes of the population.

“However, the slowdown of the economy and the worsening budget problems have led to a slowdown in the growth of both the economy and household incomes. We estimate real disposable income growth this year at 0.6%.”

🔷Among civilian sectors in 2025, only pharmaceuticals and fertilizers grew, but they too slowed by the end of the year, including because of AFU strikes on chemical plants.

“Our monetary policy is unique: we are waging war, spending a huge amount on defense, squeezing the economy, especially the civilian economy, with the high cost of money — and there are no other historical examples of such a policy in wartime.”

🔷Losses from AFU strikes on oil and gas, port, and other infrastructure are already turning into a noticeable macroeconomic barrier to growth for the Russian economy.

“Instead of increasing oil exports and production, we apparently are entering a phase of decline. Production may not exceed 500–505 million tons.

The peak of oil production will already have been passed sometime either by the middle or in the second half of this year. In the second half of the year and especially in 2027, the price of oil will fall significantly.”

🔷Agriculture is going through a crisis without receiving support.

“The profitability and incomes of our farmers have been falling for several years now. Whereas profitability, say, in grain used to average about 40%, now it is 4–5%. For the first time in recent years, our imports of food and agricultural goods have exceeded agricultural exports.”

🔷Russia is losing both the technological and the economic competition, and not only to China and the United States, but in a certain sense to Ukraine as well.

“The economy will hold, but a social crisis may arise, and precisely when no one particularly expects it. But no one expected the February Revolution either.

I believe Russia will not collapse, but I am almost certain that we will come to a social crisis. Economically we will not crash, but our lag will keep growing, with all the ensuing consequences.”

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The Insider

“The economy will hold, but we will come to a social crisis when no one expects it” — the report after which the chief economist was fired…

On August 16, the state development corporation “VEB.RF” fired its chief economist Andrei Klepach. Two days earlier, on August 14, The Moscow Times…