The head of Swedish military intelligence has dropped what he clearly regards as a bombshell. Thomas Nilsson told the Financial Times earlier this week that Russia’s economy is far weaker than it appears, that the Kremlin systematically manipulates its statistics to fool Ukraine’s Western allies, and that the central bank is understating inflation, which he believes is closer to 15 per cent than the official 5.86 per cent. For good measure, he endorsed the German intelligence service BND’s earlier estimate that Russia’s budget deficit is understated by $30 billion (£22 billion).

One need not be a Kremlin agent to find this less than convincing. That Russia’s economy is struggling is not in dispute. It lives on a mortgaged future and faces grave structural challenges: a chronic labour shortage, eroding productivity, technological debilitation, persistent inflationary pressure, declining competition and crumbling property rights, to name just a few. Vladimir Putin has been applying lipstick to this pig for years. But the spymasters, in their eagerness to paint the picture blacker still, have got the numbers badly wrong – and in doing so, they are doing Putin an inadvertent favour.

Vladimir Putin has been applying lipstick to this pig for years

Vladimir Putin has been applying lipstick to this pig for years

Start with the claim about inflation. If Russian inflation were indeed running at 15 per cent, the effect on the rouble’s real exchange rate would be dramatic. A nominally stable currency with double-digit inflation implies a sharply appreciating real exchange rate – which, in turn, should be pulling in imports. In fact, the opposite is happening. And if........

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