The role of war-related industries in Russia’s recent economic recovery

Abstract

We construct a proxy for Russia’s war-related output to evaluate the macroeconomic importance of war-related branches for Russia since the 2022 invasion of Ukraine. Our results suggest that war-related branches contributed significantly to Russia’s economic recovery after the sharp decline of GDP in spring 2022. The largest contribution came from low-tech industries where Russia is less dependent on imports. With war-related branches diverting resources from civilian industries, Russia will find it increasingly difficult to maintain its current level of growth.