On Thursday, disturbing words for the Russians were said. – The economy of Russia is on the edge of the recession – said the head of the Russian Ministry of Economic Development Maksym Reszetnikow. The words were spoken in the same forum where the Russian President spoke.
On Friday, the Russian Minister of Economic Development was quickly brought to Earth by President Putin. “We can't let the recession,” Putin said, referring to the words of Reszetnikov. The president pointed to an increase in the manufacturing industry, which, he claims, reduced the role of oil and gas exports in the Russian economy.
“The perception of the Russian economy as raw materials was clearly outdated,” Putin said, adding that in the first four months of 2025 the economy increased by 1.5 percent, and inflation dropped to 9.6 percent.
Sanctions versus the Kremlin's optimism
The Russian Economic Forum in St. Petersburg, which for years attracted Western investors, since the invasion of Ukraine in 2022 has become a platform for business leaders from Asia, Africa and Latin America. Western managers bypass the event, and the Russian economy is struggling with sanctions that have limited access to technology and investments.
Despite this, the Russian economy has surpassed forecasts so far. High defense expenses drive economic growth and maintain low unemployment, although at the same time conquer inflation. Large recruitment bonuses for military and benefits for families killed in Ukraine improved the financial situation in the poorer regions of the country.
However, economists warn that in the long run there is no foreign investment and growing inflation may lead to economic stagnation.
Military industry as a motorboat?
Putin pointed to the development of the military industry as a source of new technologies, which – as he assures – is also used in the civil sector. The president promised to continue the modernization of the Russian army, using experiences from the Ukrainian Front.
– We will increase the potential of the Russian armed forces, modernize military infrastructure and equip the army with the latest equipment – Putin announced.
Although the Russian leader tries to build a picture of a stable economy, reality is more complicated. Sanctions, lack of access to Western technologies and limited investments in civil sectors remain a serious challenge. Experts emphasize that addiction to military expenses and short -term stimuli may soon affect the economy, whose foundations remain fragile.
