Russian President Vladimir Putin emphasized the need for a competent economic strategy to prevent the country’s economy from sliding into recession. Speaking at the St. Petersburg International Economic Forum, Putin highlighted the importance of pursuing a well-thought-out budgetary, tax, and monetary policy. “This must not be allowed to happen under any circumstances,” he said, adding that the economy requires “balanced growth.”
Economists have warned of a slowdown in the economy, citing the country’s slowest quarterly expansion in two years during the first quarter of 2025. Putin’s concerns come as the Russian economy faces mounting pressure due to the ongoing conflict with Ukraine and subsequent Western sanctions. Despite these challenges, Putin remains optimistic about the economy’s potential, attributing its resilience to diversified growth drivers, including the financial and IT sectors.
Diverse Economic Drivers
While acknowledging the defense industry’s contribution to Russia’s economic growth, Putin denied that it was the sole driver of the economy. “Yes, of course, the defense industry played its part in this regard, but so did the financial and IT industries,” he said. Putin emphasized the need for balanced growth, urging officials to closely monitor industry performance.
Calls for Monetary Policy Adjustment
Deputy Prime Minister Alexander Novak and German Gref, CEO of Russia’s largest lender Sberbank, have called for a reduction in interest rates to stimulate economic growth. Novak suggested it was time to “cut the rate and start heating up the economy,” while Gref advocated for faster rate cuts to incentivize company investments.
Economic Challenges and Opportunities
Despite Western sanctions, Russia’s economy has outperformed predictions, driven by high defense spending and increased military expenditure. However, economists warn of long-term threats posed by inflation and a lack of foreign investment. Putin remains committed to military modernization, leveraging new technologies to enhance the Russian armed forces’ capabilities. “We will harness new technology to improve the combat capabilities of the Russian armed forces, modernize military infrastructure facilities, equip them with the latest technology and weapons and equipment,” he said.