Vadym Denysenko: Despite economic decline, kremlin can fund war for another year

russia is experiencing a systemic economic crisis affecting nearly all sectors except defense. Nevertheless, the kremlin continues to finance the military-industrial complex and the army, with resources to sustain this for at least another year.

This assessment was shared by Vadym Denysenko, head of the Dilova Stolytsia (Business Capital) analytical center, during a discussion at the Media Center Ukraine.

“It’s important to understand that russia is indeed facing a systemic economic crisis. We can call it a recession or a ‘cooling down’, as russian propaganda does, but it is a systemic crisis nonetheless. Yet, despite this crisis, the regime can still fund its military-industrial sector and army for at least another year, possibly longer. All other programs are being slashed, and this is already happening,” stated Denysenko.

He added that economic data show declines across almost all production sectors except defense. However, even there, growth has stalled due to labor shortages, technological deficits, and exhausted budget reserves.

“In the military-industrial sector, we no longer see the insane growth rates; we see stagnation. This is due to a lack of personnel, technology, and the depletion of budgetary momentum. They cannot continue in this direction,” the expert emphasized.

Denysenko also expressed concern over russia’s plans to increase defense spending again starting in 2026, which signals the kremlin’s intention to engage in a full-scale arms race.

“I am very concerned that there are certain indications – which can now be called hints – that in the fall, discussions will begin on the 2026 budget with yet another defense spending hike. In other words, this suggests russia is engaging in large-scale militarization,” he said.

The expert also emphasized that further militarization accelerates russia’s economic decline and confirms putin’s refusal to consider peace negotiations.

“On the one hand, this will certainly speed up russia’s decline. But it also means that putin has no intention of discussing peace anytime soon,” Denysenko concluded.

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