Russia's wartime economy is showing signs of long-term strain, with growing concerns over rising debt, high military spending, and a shrinking budget surplus. The government has been forced to spend heavily on the war effort, which has caused the budget deficit to grow significantly. This has led to more pessimism among consumers and businesses, with the Levada Center's consumer sentiment index falling to 94 in the summer—below the 100 threshold that separates positive from negative sentiment. This is a drop from 116 in the spring and summer of 2025, indicating a growing sense of unease among the public. The economic slowdown has been noticeable, with growth slowing from over 4% in 2023-24 to a projected 0.6% this year. The economy contracted in the first quarter of the year before showing a slight recovery in the second. This has been exacerbated by challenges such as higher gasoline prices and shortages caused by Ukrainian drone attacks on Russian oil refineries. These attacks, along with cyberattacks on online retailers like Wildberries and Ozon, have disrupted supply chains and affected both consumers and small businesses, many of which have lost inventory and customers. Despite these challenges, Russia has seen some financial relief from higher oil prices driven by the ongoing conflict in Iran. Oil export earnings have risen to over $15 billion in June and $13.8 billion in July. However, Western sanctions have limited Russia's access to new investments and technology, which are crucial for long-term economic growth. While the government maintains that the economy is stable, some economists warn that the structural foundations of the economy are weakening due to high spending, low growth, and rising debt. The war has also led to increased military spending, which has boosted employment in some regions. For example, the Uralvagonzavod tank factory in Nizhny Tagil has expanded its workforce from 20,000 to over 38,000 since the invasion of Ukraine. Similarly, defense firms like Kupol have significantly increased their production of drones and missiles. However, the country is facing a shortage of skilled labor, partly due to the emigration of younger people who fear conscription and political repression. These factors are limiting production in both the defense sector and the broader economy. Despite these challenges, the Kremlin insists the economy is under control, with spokesperson Dmitry Peskov dismissing concerns over the budget deficit as temporary and volatile. However, some experts, like Andrei Klepach from VEB.RF, have warned of Russia's declining position in global economic and technological competition. Klepach was later fired for his comments, highlighting the sensitivity of the topic within the government.