When the war in Ukraine began in February 2022, one of the West's key instruments of pressure on Russia was supposed to be the economy. Unprecedented sanctions were introduced, part of the Russian central bank's foreign exchange reserves was frozen, numerous international companies left the country, access to Western financial markets was dramatically restricted, and the European Union began rapidly reducing its dependence on Russian energy. In the first months of the war, there were many forecasts that a combination of financial isolation, technological restrictions and declining exports could seriously destabilize the Russian economy.

Four years later, it is clear that this scenario did not materialize as quickly or on the scale that many expected. But that does not lead to the opposite conclusion—that sanctions have failed or that the Russian economy is stronger today than it was before the war. The truth, as is usually the case in economics, is considerably more complex.

Russia has demonstrated an exceptionally high level of short-term economic resilience. After real GDP declined in 2022, the economy returned to growth relatively quickly. According to World Bank data, real Russian GDP recovered strongly during 2023 and 2024, while the country's nominal GDP remained above two trillion dollars and continued to grow. This was the result of a combination of factors: high government spending, particularly in defense-related industries; strong energy export revenues during key periods; the redirection of trade flows toward Asia; as well as highly active monetary and fiscal policies.

One of the biggest misjudgments in the initial expectations was the assumption that Russia would be unable to redirect a significant portion of its foreign trade. Moscow nevertheless managed to do so, primarily by intensifying economic relations with China, India, Turkey, Central Asian countries, the Middle East and other markets that did not join the Western sanctions regime. Russian oil did not disappear from the global market—the buyers, transportation methods, financing and logistics changed.

At the same time, the state intervened very heavily in the economy. Large public expenditures, military production, infrastructure projects and government orders increased industrial activity and employment. For a period, Russia therefore found itself in an almost paradoxical situation: the war and sanctions did not cause mass unemployment; instead, they contributed to a labor shortage. The Bank of Russia states that unemployment at the end of 2025 was at a historic low of around 2.1%.

This, however, is where the other side of the story begins.

Low unemployment in such an economy does not necessarily mean that the economy is healthy. It can also be the consequence of demographic problems, the mobilization of part of the population, the emigration of some working-age people, and enormous government demand for workers in sectors linked to public and military spending. As a result, wages in many sectors have risen faster than productivity, creating additional inflationary pressure. The Bank of Russia itself has warned about precisely this problem.

The strongest evidence that the Russian economy is not in a comfortable position is the level of interest rates. During 2024 and 2025, the central bank had to pursue an extremely restrictive monetary policy, and the key interest rate reached as high as 21% at one point. During 2025 and early 2026, it began to decline gradually, but in February 2026 it still stood at 15.5%. Such interest rates are not characteristic of a problem-free economy. They make borrowing more expensive for companies and households, constrain investment, and demonstrate how seriously the central bank views inflationary risks.

Another important signal is the slowdown in economic growth. After very strong growth during 2023 and 2024, the Bank of Russia estimates that GDP growth slowed to approximately 1% in 2025, compared with almost 5% the previous year. In other words, the model of strong growth driven by government spending is beginning to encounter its natural limits.

This may be the most important element in understanding the Russian economy today. GDP growth is not the same thing as an increase in long-term economic strength.

If the state produces more tanks, missiles or other military equipment, that production is included in GDP. Workers' wages rise, factories operate, and industrial output increases. From a statistical perspective, the economy grows. However, military equipment generally does not increase the future productivity of the population in the same way as a new automobile factory, technology company, highway, modern power plant or research center.

That is why Russia's economy must be assessed by distinguishing between the state's ability to finance the war and the quality of long-term economic development.

In the first respect, Russia has undoubtedly demonstrated much greater resilience than was expected in the West in 2022. It has enormous territory, abundant natural resources, significant energy production, developed heavy industry, a nuclear sector, agriculture and a military-industrial complex. In addition, Russia's public debt has traditionally been relatively low compared with that of most major Western economies, giving the state a certain amount of fiscal space.

But long-term problems are becoming increasingly visible.

Technological sanctions significantly complicate access to sophisticated Western machinery, electronics, industrial equipment and certain technologies. Many components can be obtained through third countries, but this often means higher costs, longer supply chains and greater dependence on alternative suppliers. At the same time, Russia has become significantly more economically dependent on China than it was before 2022.

The energy sector no longer has the same structure it had before the war either. For decades, Europe was an ideal buyer of Russian gas and oil: geographically close, wealthy and connected by direct pipelines. Part of that market has now been lost, perhaps permanently. Energy sales to Asia are important, but they require different infrastructure and often involve different commercial terms.

For all these reasons, neither the claim that “sanctions have destroyed Russia” nor the claim that “sanctions do not work at all” is economically serious.

Sanctions did not produce an immediate collapse. Russia adapted much better than many of their architects expected. But their effect should be viewed as cumulative and long-term: more expensive capital, weaker access to technology, less competition, greater dependence on several major trading partners, and an increasing share of economic resources directed toward sectors that may not create long-term productivity.

That is why the answer to the question in the title is: the strength of the Russian economy is not a myth, but it is not the whole truth either.

Russia has demonstrated that its economy is much more resilient than many analysts assumed at the beginning of 2022. It has not suffered financial collapse, it has not lost its energy markets, and it has managed to maintain production, employment and the functioning of the state despite one of the largest sanctions regimes in modern history.

But resilience and prosperity are not synonyms.

The real question is no longer whether Russia can withstand several years of sanctions and war. It has already shown that it can.

The question for the next decade is what price Russia will pay for that resilience through lower productivity, technological lag, demographic pressures, inflation, and an ever-greater dependence of the economy on the state and military spending.

The answer to that question will show whether today's Russian economic strength is the foundation of long-term power—or primarily the impressive ability of a large resource-based economy to adapt to exceptionally difficult circumstances.