With population shrinking and already five million workers short, Russia's economy faces demographic catastrophe

Business Insider With population shrinking and already five million workers short, Russia's economy faces demographic catastrophe Article by Jennifer Sor • 17 hrs • 2 mins read Russian President Vladimir Putin looks on at Navy officers during the Navy Day parade on July 31, 2022 in Saint Petersburg, Russia. Russia's economy is facing a serious demographic problem. The country's population could halve by the end of the century, according to the Atlantic Council. The researchers at the Washington DC-based think tank pointed to Russia's long-standing population decline, which has led to a decline in overall population growth over the past decade, according to the World Bank. This decline has been exacerbated by the Russo-Ukrainian war. According to US intelligence, the Russian death toll rose to more than 300,000 by the end of 2023. About a million Russians also fled the country shortly after Vladimir Putin ordered the invasion of Ukraine. The demographic trend poses a problem for the Russian economy, which is already struggling with a severe labor shortage. According to an estimate by the Economic Institute of the Russian Academy of Sciences, Russia will be short a record five million workers by the end of 2023. Russia has turned to migrants and even prison labor to supplement its workforce. But these are not sustainable solutions to its population problem, say the think tank's researchers. "Putin's government has shown no concern that Russia's population could shrink by half by the end of the century. Unless Russian leaders can develop and finance more effective policies, the only solution to population decline will be a combination of incorporation of non-Russian territories and/or immigration from Asia or Africa," the researchers said in a report published this week. If Russia's population continues to shrink, immigrants will become increasingly important to economic recovery. Russia's economy could be worse than Indonesia's by 2026 Experts have said a shrinking population could lead to a number of problems for the Russian economy, citing lower growth and productivity as examples. By 2026, the Russian economy could fall behind that of Indonesia, where the population is growing, according to the Atlantic Council. "Putin's choice of timing for military aggression in Ukraine may have reflected an understanding that Russia's demographic (and economic) situation would not improve over the next two decades. But the war is turning a growing crisis into a catastrophe," it added. The Russian economy is not exactly on solid ground, especially as the invasion of Ukraine becomes increasingly costly and damages economic ties to world markets. Moscow is on track to fall into a severe recession by the end of the year, a UC Berkeley economist said. He pointed to Russia's collapsed energy trade and its dwindling access to the US dollar.