Boom at the front, bust at home: Russia’s war economy is holding but its people are cracking

By 2024, Russia appeared to have defied expectations. Despite unprecedented Western sanctions, the economy grew by 4.9%, unemployment fell to record lows, and factories linked to the defence sector ran around the clock. President Vladimir Putin pointed to these figures as proof that Russia had adapted to wartime conditions.But beneath the headline numbers another story has quietly emerged: more Russians are declaring bankruptcy, banks are becoming increasingly cautious, borrowing costs remain among the highest in two decades, and some of the country's largest lenders warn of deteriorating loan quality.So, is Russia's economy finally beginning to crack? Or are rising bankruptcies simply the inevitable side effect of an economy adjusting after years of extraordinary wartime spending?As the war in Ukraine grinds into 2026, more than four years since Moscow's full-scale invasion in February 2022, that question has grown harder to dodge. The answer lies somewhere in between.