President Vladimir Putin has urged Russian officials to prevent a recession “under any circumstances,” amidst growing economic concerns. The plea comes as Russia faces increasing challenges following its military actions in Ukraine and the subsequent Western sanctions.
Economic Concerns Grow
While Russia's economy showed growth in 2023 and 2024, largely due to massive state spending on the defence sector, this growth is now showing signs of slowing. The country's Minister for Economic Development, Maxim Reshetnikov, has warned about the potential economic headwinds.
Putin addressed these concerns at the St. Petersburg International Economic Forum, stating that some experts point to the risks of stagnation and recession. He emphasised the need for a “competent, well-thought-out budgetary, tax and monetary policy” to avoid such outcomes.
Is the Defence Industry Sustainable?
Analysts have long cautioned that relying heavily on defence spending is not a sustainable model for long-term economic growth. They argue that it doesn't reflect a genuine increase in productivity across other sectors of the economy.
Putin acknowledged the role of the defence industry but insisted that other sectors, such as finance and IT, also contributed to the economy's growth. He called for balanced growth and urged officials to monitor the health of various industries and companies.
The situation highlights the delicate balance Russia must strike between military spending and overall economic stability. As the war in Ukraine continues, the pressure on the Russian economy is likely to intensify, making Putin's call for vigilance even more crucial.
- Russian government clearly nervous as country faces economic challenges
- Economists warn for months of a slowdown in the Russian economy
- Putin urged officials not to let Russia fall into recession