Putin Faces Hard Choices in Ukraine as Russia's $3 Trillion Economy Contracts 0.3%
Updated
Updated · Reuters · May 18
Putin Faces Hard Choices in Ukraine as Russia's $3 Trillion Economy Contracts 0.3%
3 articles · Updated · Reuters · May 18
Kaupo Rosin, Estonia's foreign intelligence chief, said Putin now has few good options in Ukraine as Russian forces make only slow gains and Moscow loses more troops than it recruits.
Western sanctions are increasingly squeezing Russia, Rosin said, with financial-sector measures "really, really hurting" and curbs on oil exports cutting income; Russia's $3 trillion economy shrank 0.3% in the first quarter.
Rosin said a general mobilisation would be deeply unpopular and could threaten domestic stability, but another European intelligence chief told Reuters there is still no sign the pressure is changing Moscow's war aims.
The officials said Russia still wants full control of Donbas, sees no imminent peace breakthrough, and is likely to keep large forces near Ukraine and expand its military posture along NATO's border after the war.
Does Putin's unwavering war plan signal true resilience, or is it a high-stakes gamble against mounting internal crises?
With a demographic crisis and huge losses, can Russia sustain its military ambitions from the Arctic to the Black Sea?
As Russia builds new alliances in Asia, is the West's economic pressure campaign against Moscow becoming increasingly irrelevant?
Russia’s Economy Contracts in 2026: War Spending, Sanctions, and the Strain of a Protracted Ukraine Conflict
Overview
In early 2026, Russia's economy entered its first downturn since 2023, with GDP shrinking by 0.3% in the first quarter and a sharper 2.1% drop in January. This decline signaled a deepening crisis, even as inflation slowed. However, a surge in consumer demand during the New Year led to inventory shortages and renewed price pressures. While the services sector saw a slight rebound in job creation, these mixed signals highlight growing instability. The report shows how these economic shifts, driven by falling demand and rising prices, are straining Russia’s resilience amid ongoing conflict and sanctions.