"A Recession in Russia Would Be Extremely Dangerous" – President Vladimir Putin

"A Recession in Russia Would Be Extremely Dangerous" – President Vladimir Putin
St. Petersburg, 20 June 2025

Russian President Vladimir Putin has issued a serious warning about the state of the Russian economy, stating that if the country slides into a recession, it would create an "extremely dangerous situation" that must be avoided at all costs.

Speaking at the St. Petersburg International Economic Forum, Putin said,
“Some experts and analysts are warning of stagnation or even recession. We will do everything possible to prevent such a scenario.”

He emphasized the need for “disciplined and well-planned budgeting, a sound tax system, and prudent financial policies.”

Russia Nearing Recession, Says Finance Minister
Russian Finance Minister Maksim Reshetnikov acknowledged that the economy is “on the brink of recession,” adding, “Now is the time to make the right financial decisions, which will determine whether Russia enters a recession.”

In late 2024, Russia’s Central Bank raised interest rates to over 20%—the highest since 2000—to counter inflation. However, this month the rate was lowered slightly to 20%.

Economists noted that the recent slowdown in growth was expected, as Russia’s economic momentum over the past two years was largely driven by military spending.

Putin admitted that the defense sector had fueled economic growth, but insisted it was not the only factor.
“The financial sector, technology industry, and manufacturing have also contributed significantly,” he said.

He advocated for “balanced economic growth” and urged government officials to pay closer attention to industry trends, corporate activity, and employment conditions.

Calls to Stimulate the Economy
Deputy Prime Minister Alexander Novak said,
“It’s time to lower interest rates, stimulate the economy, and increase investment.”

German Gref, CEO of Russia’s largest bank Sberbank, echoed this call, urging that bank loans be made more accessible to boost business activity.

During the annual forum, Putin outlined Russia’s economic strengths and plans to attract international investment. However, since Russia's 2022 invasion of Ukraine, Western businesses have boycotted the event. The current attendees are primarily from Asia, Africa, and Latin America.

Military Spending and Its Economic Effects
Despite Western sanctions, Russia’s heavy military spending has helped sustain its economy, reducing unemployment. However, this has also driven inflation higher and discouraged long-term foreign investment.

Alongside military expenditures, payments to families of soldiers killed in Ukraine and generous bonuses for new recruits have raised incomes in poorer regions.

Military Tech Expansion to Civilian Sectors
Putin stated that advancements in military technology are positively impacting other sectors of the Russian economy.
“The development of military technology has not only improved battlefield capabilities but has also benefited civilian industries,” he said.

He pledged to modernize Russia’s defense sector using lessons learned from the Ukraine war and to expand cooperation with allied nations in military-tech development.
“We aim not only to supply weapons but also to build joint factories, transfer technologies, and train personnel,” said President Putin.