Putin says Russian recession must not happen ‘under any circumstances’ | Business and Economy News

The Russian economy should not slip into the recession, said President Vladimir Putin, after economists have warned against months of slowdown in growth.

Putin told participants, including government ministers and central bankers at the Saint Petersburg International Economic Forum on Friday that some specialists and experts “pointed to the risks of stagnation and even a recession”.

“This should in no case be authorized to happen,” he said.

“We must pursue a competent budgetary, fiscal and monetary policy,” he added.

The Minister of the Economy Maxim, Reshetnikov, said Thursday that the economy was about to slip into a recession, and that monetary policy decisions would determine whether it falls into one or not.

In October, the Russian bank increased its key interest rate to the highest level since the early 2000s to limit high inflation, to reduce it from a percentage to 20% earlier this month.

In addition, economists have warned against months of a slowdown in the economy, the country displaying its slowest quarterly expansion in two years in the first quarter of 2025.

However, the Kremlin said it expected the slowdown due to two years of rapid expansion because it increased military spending to finance its war against Ukraine.

However, Putin denied that the defense industry only stimulated the economy. “Yes, of course, the defense industry has played its role in this regard, but the financial and computer industries too,” he said.

He added that the economy needed “balanced growth”, calling on managers to keep an attentive eye on all the health indicators of our industries, businesses and even sole proprietorships. “

At the same time, Deputy Prime Minister Alexander Novak said on Friday that it was time to “cut the [interest] Evaluate and start to heat the economy ”.

The German GREF, CEO of the largest lender in Russia, Sberbank Sber.MM, also called for faster rate reductions to encourage companies to invest.

Military industry growth

Putin used the annual economic forum to highlight the economic prowess of Russia and encourage foreign investments, but Western leaders avoided it since Moscow sent troops to Ukraine in 2022, leaving the business leaders of Asia, Africa and Latin America.

The economy, struck by a multitude of Western sanctions, has so far upgraded predictions. High defense expenses have propelled growth and have maintained low unemployment despite fed inflation.

The major recruitment bonuses for military commitments and death services for those who are killed in Ukraine have also put more income in the poorest regions of the country. But in the long term, inflation and the lack of foreign investments threaten the economy.

Economists have warned of increasing pressure on the economy and the probability of stagnating due to a lack of investment in sectors other than the army.

Putin said that the growth of military industries has helped develop new technologies available to the civil sector.

He undertook to continue the military modernization, based on the lessons learned during the fighting in Ukraine.

“We will exploit new technologies to improve the combat capacities of the Russian armed forces, modernize the military infrastructure facilities, [and] Equip them with the latest technologies and weapons and equipment, “he said.

“At the same time, we intend to develop technical military cooperation with friendly countries. And we are talking not only about supplies or the modernization of equipment and weapons, but also joint development, training of staff and the creation of key companies and production facilities, “he added.