Russia on the brink. One step away from economic collapse.

• Russia avoided recession, although GDP grew by just 0.1% in the second quarter after falling by 0.6% in the first quarter.
• Year-on-year growth was 1.1 percent, below economists' forecasts.
• Without the military sector, the rest of the economy would be in serious crisis, with future GDP growth forecast at no more than 2 percent per year.

Russia has released GDP data , which shows it has managed to avoid recession, though it narrowly missed it. Growth in the second quarter compared to the first was only 0.1 percent. In the first quarter, Russia's GDP fell by 0.6 percent. A recession is defined as at least two consecutive quarters of GDP decline, so it can be considered a near miss this time.

In this context, it's worth recalling that in June, Vladimir Putin said that a recession must be avoided at all costs . This was his commentary on Economy Minister Maxim Reshetnikov's assertion that Russia was on the brink of one. Data confirms that it was indeed on the brink and that it was indeed avoided.

Year-on-year, Russian GDP growth was 1.1 percent, below economists' expectations of a 1.5 percent increase.

Following the 2022 invasion of Ukraine , the Russian economy continued to grow quite dynamically for another year, thanks to the military sector and consumer spending, which increased in part due to relatively low interest rates. However, the situation then began to deteriorate.

• The war caused serious labor shortages in the economy, as many workers either fled abroad or were conscripted into the military.
• As a result, problems arose which, together with external sanctions, led to a significant increase in inflation.
• This, in turn, caused interest rates to rise, which significantly cooled the economy and brought it to the brink of recession .
• And if we didn't count the military sector, it would turn out that the entire rest of the Russian economy is currently in serious trouble.

The Russian central bank has already started cutting rates, and inflation has started to decline again, but virtually all economic forecasts for Russia in the coming years indicate that economic growth will be very slow, unlikely to exceed 2 percent annually.