Inflation, struggling healthcare and economy await Russians in 2024 amid 68% defense budget increase
Consistently heightened military spending will highly likely contribute to inflationary pressures within Russia, the UK Defense Intelligence update for Oct. 23 reads.
Russian government spending is becoming increasingly focused on the cost of its war on Ukraine, the update says. Russia’s proposed 2024 budget envisages an approximate 68% increase in planned defense spending compared to that allotted for 2023 – this puts defense spending for 2024 at around 6% of GDP.
In contrast, education and healthcare spending will be frozen at the 2023 allocation, which amounts to a real term spending cut due to inflation.
More spending will need to be allocated to fund payments and healthcare costs for the mounting number of wounded soldiers and the families of those killed in the war. More than half of those soldiers wounded severely enough to require longer term medical care have lost limbs, with one in five requiring upper limb amputations, Deputy Labor Minister Alexei Volchenko stated on Oct. 17. These injured soldiers will almost certainly require lifelong healthcare.
Continued increases in military spending would force the Russian government to make difficult decisions about how to fund the war, likely increasing financial pressures on Russian business. However, any substantial future reduction in military expenditure would likely remove an increasingly central driver of Russian economic activity in the face of sanctions.
Earlier, UK intelligence reported that Russia is preparing for years of combat operations in Ukraine. This is evidenced by Russia's defense budget, which will increase to 30% of total state spending by 2024.
Forbes previously noted that Russia has spent about $167.3 billion on the war since the beginning of the full-scale invasion in Ukraine.
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