Russia economy crisis as massive attack on Ukraine that killed five 'cost nearly £1bn'

Russia's ruthless attack across large parts of Ukraine on Monday that targeted energy infrastructure and killed at least five people is estimated to have cost the Kremlin almost £1 billion.

Vladimir Putin's army launched more than 100 missiles and 100 drones in a ferocious attack that lasted hours.

Ukrainian officials described the bombardment as one of the largest since Russia's full-scale invasion in February 2022.

Yet the attack did not come without costs for the Kremlin, as Russia struggles to finance the war.

Forbes Ukraine and Ekonmichna Pravda, a project of Ukrainska Pravda, estimated that the attack would have cost Russia between $1.2 billion (£907 million) to $1.3 billion (£982 million).

Putin has put the Russian economy on a war footing, investing heavily in the military-industrial complex.

This has helped to create a domestic boom, despite sanctions, as armament factories work round the clock and employ an ever-increasing number of Russians.

The International Monetary Fund (IMF) now predicts that Russia's GDP will grow by 3.2 percent this year, largely due to the performance of the defence sector.

Yet many Western analysts believe the Russian economy will suffer in the long term, as spending on other sectors of the economy starts to dry up.

Chris Weafer, founding partner of Eurasian consultancy firm Macro-Advisory, told the BBC: "Longer term, you are destroying the economy. There is no money going into future development."

He pointed to the Kremlin's plan in 2020 to develop its infrastructure through a programme called the National Project.

The Kremlin planned to invest a massive $400 billion (£302 billion) to improve infrastructure, communications, and transportation.

Instead, "almost all that money has been side-tracked to fund the military industrial-complex and support stability in the economy".

Putin's invasion of Ukraine has also hit oil and gas revenues - both important sources for financing the war.

In 2024, Russia’s projected loss of income from natural resources stands between $27 billion (£20 billion) and £34 billion (£26 billion).

For context, these figures track closely to Russia’s planned spending on education and health care in 2024, allocations that have dropped as funding was diverted toward Moscow’s brutal military campaign.