US says conflict in Ukraine harms the Russian economy

The Financial Times reported on Thursday, citing a draft text from the US Treasury Department, that the conflict in Ukraine significantly affects the Russian economy, raises local prices, and forces Moscow to allocate a third of its budget for defense. 

The newspaper quoted Rachel Lyngaas, the department’s chief sanctions economist, as saying that the Russian economy could have grown by more than five percent if President Vladimir Putin had not waged war on Ukraine. 

Lyngaas added that the country's performance was lower compared to other energy exporters, such as the United States. 

The US Treasury Department did not respond to Reuters' request for comment. 

A Financial Times report stated that Moscow is spending over $100 billion, or nearly a third of its total expenditures, on defense in 2023. 

Russian oil and gas revenues, the backbone of the economy, took a hit this year but witnessed a slight recovery in recent months with the rise in oil prices. In addition, Western sanctions did not have a significant impact on Russian oil trade as initially expected. 

Reuters