Shattered Ruble: How Russia’s Economy Faces Its Darkest Hour

While Russia attempts to mislead the world by concealing critical economic data, mounting evidence suggests the country’s financial situation is spiraling out of control. Despite claims that the economy has “flourished” under sanctions, skyrocketing inflation and unstable bubbles in key industries reveal a looming economic disaster. This impending crisis, argues Prof. Volodymyr Lugovskyy, Chair of the Economics Department at Indiana University, could dramatically derail all of Russia’s global ambitions.

Instead of addressing the urgent economic issues, Russia’s politicians are making decisions driven by populism, ignoring the Central Bank’s recommendations to stabilize the economy. This short-sighted approach is expected to accelerate the collapse, leading to devastating consequences.

Speaking with Kyiv Post’s Jason Jay Smart, Prof. Lugovskyy warns that once the situation deteriorates further, Russia’s historical pattern of blaming others will likely resurface. Rather than taking responsibility, politicians are expected to scapegoat those who try to implement necessary but unpopular reforms.

This chilling effect could deter government employees from taking actions that serve the country’s long-term interests, further deepening the crisis. How bad could things get? Inflation, industry bubbles, and political mismanagement could push Russia’s economy to the brink, with global implications for its military and geopolitical strategies.

Lugovskyy, who was born in Ukraine, received his PhD from Purdue University and is an Associate Professor of Economics at Indiana University, where he is now the Chair of the Economics Department.

Lugovskyy’s primary research interests include international trade, experimental economics, and financial economics. He has numerous publications in leading journals, such as the American Economic Review, European Economic Review, Journal of Financial Economics, and Journal of International Economics.