Labor Shortage Deepens Due to Russian Mobilization Order... "GDP Expected to Fall by About 0.5%p"

'Escape Line' to Avoid Conscription... Concerns Over Reduced Income and Shrinking Consumption

On the 25th (local time), Russian reservists called up by the mobilization order gathered around the assembly center in Krasnodar. [Image source=Yonhap News]

[Asia Economy Reporter Yoon Seul-gi] As Russian citizens begin fleeing the country to avoid the Russian government's military mobilization order, there is an analysis that the Russian economic crisis could worsen.

On the 27th (local time), Bloomberg reported that in Russia, which is experiencing a record low unemployment rate, about 1% of the current workforce is expected to leave their jobs due to this mobilization order. With the recent increase in people attempting to escape abroad to avoid conscription and the reduction in income caused by the draft, there is also a possibility that already contracted consumption will decrease further.

The Russian government is already planning significant income tax hikes and increases in electricity and water rates over the next two years to cover war expenses, increasing the economic burden on Russian citizens. Sophia Donets, an economist at Renaissance Capital, said, "The mobilization order will have a very negative impact on consumer sentiment," and forecasted that this year’s gross domestic product (GDP) will decline by about 0.5 percentage points.

There is also a forecast that economic shocks such as inflation and negative growth caused by the mobilization order could continue for five years. Russian economist Alexander Isakov pointed out, "The worse part is that the negative effects of this mobilization order will persist for the next five years."

Natalia Zhubarevich, a Russian economy expert at Moscow University, predicted that the agriculture and construction sectors will be hit hard, as most of the mobilized personnel are likely to come from rural areas. She said, "In the long term, this mobilization order and the increase in war casualties will further reduce Russia’s already scarce labor force," adding, "The departure of wealthy and educated personnel will also pose a significant problem for the Russian economy."

Meanwhile, following the Russian government's mobilization order, the exodus of Russians continues. The Georgian Minister of Internal Affairs announced that the number of people entering from Russia has surged to 10,000 per day, nearly doubling from the previous 5,000 to 6,000. According to Mongolian authorities, at just one of the eight border checkpoints adjacent to Russia, 3,000 Russians entered Mongolia from the 21st to the 25th.