President Vladimir Putin has hailed Russia’s economic outlook, stating that the nation has successfully curbed inflation and lessened its dependence on energy exports.
His optimistic portrayal, delivered in a speech at the St Petersburg International Economic Forum, stood in contrast to more cautious statements from within his own government, some of whom warned at the same conference that Russia faced the potential for a recession.
Economic Minister Maxim Reshetnikov previously indicated that the country is “on the brink of going into a recession”.
Mr. Putin acknowledged these recession warnings but emphasized the importance of preventing it: “it mustn’t be allowed”.
He highlighted the steady growth observed in manufacturing industries, which he credited with enabling the country to reduce its reliance on oil and gas exports.
“The perception of the Russian economy as based on raw materials and dependent on hydrocarbon exports has clearly become outdated,” Mr. Putin asserted, adding that the economy expanded by 1.5% in the first four months of 2025 and inflation has decreased from double digits to 9.6%.
Mr. Putin has historically used the annual forum to showcase Russia’s economic strength and attract foreign investment. However, Western business leaders have largely avoided the event since Moscow’s military intervention in Ukraine in 2022, leaving participation primarily to leaders from Asia, Africa, and Latin America.
Despite facing a range of Western sanctions, the Russian economy has, to date, performed better than initially predicted.
Elevated defense spending has driven growth and maintained low unemployment, although it has also contributed to inflation.
Generous recruitment bonuses for military enlistees and substantial death benefits for those killed in Ukraine have also injected additional income into the country’s less prosperous regions. However, sustained inflation and a lack of foreign investment pose long-term challenges to the economy.
Economists have cautioned about growing strain on the economy and the likelihood of stagnation due to insufficient investment in sectors outside of the military.
Mr. Putin argued that the expansion of military industries has facilitated the development of new technologies that are now accessible to the civilian sector.
He pledged to continue modernizing the military, drawing on lessons learned from the conflict in Ukraine.
“We will raise the capability of the Russian armed forces, modernize military infrastructure, and equip the troops with cutting-edge equipment,” Mr. Putin declared.
