The nation’s GDP has continued to grow despite Western pressure, the president said
© Getty Images / Vladislav Zolotov
Russian President Vladimir Putin lauded the country’s macroeconomic stability as its major competitive advantage and an effective driver for growth at a plenary meeting of the St. Petersburg International Economic Forum (SPIEF) on Friday. According to the Russian president, the government’s responsible and balanced economic policy has made it possible to counter the outside pressure.
Positive economic outlook
The Russian economy has continued to grow, with GDP rising by 3.3% in April of this year, the president said. Positive dynamics were also projected for the future, with the country’s overall economic growth expected to reach 2% this year.
The government will continue working to reduce inflation, which at 2.2% is already close to a historic low. The figure is lower than in many Western countries, the Russian leader noted.
Unemployment in Russia is also at an all-time low of 3.3%, Putin said, as he called on the government to help boost labor productivity. He stressed that the poverty level in Russia was declining, a trend that he said must be maintained.
The Russian government managed to prevent a destabilization of prices despite the Western sanctions pressure thanks to its use of budget mechanisms and monetary instruments, Putin said.
“We will continue building up our macroeconomic policy based on the actual situation and bearing the inflation target in mind – just as we did last year and during the pandemic, when demand dropped in the economy,” Putin told the audience.
Russian lenders have invested actively, while their capital bases have successfully passed strength tests. In 2022, lending to businesses grew 14.3%, while consumer lending increased 9.5%. Mortgage loan growth has also been brisk, he added, describing the trends as “quite good.”
Exodus of Western firms prompted growth of Russian businesses
Foreign companies that left Russia due to Western sanctions are swiftly being replaced by local ones, according to Putin. Their exit has opened up some 2 trillion rubles ($23.8 billion) worth of niches, he said, noting that while Russia never asked anyone to leave, the exodus of multinationals turned out to be a benefit, as it encouraged domestic businesses to grow and expand.
“Many foreign brands have long been selling products that are fully produced at our facilities. In fact, these are Russian goods, only with foreign logos. So, their production will not stop with the departure of the brand owners. Only the logo changes. The profits from these businesses remain in our country.”
Putin noted, however, that Russia remains open to the return of foreign producers. He pledged to create the necessary conditions for them to operate in Russia. “By the way, we view those foreign companies who have stayed or are about to operate [in Russia] as domestic producers, and we will treat them as [Russian businesses],” Putin emphasized.
Shift to national currencies ‘beginning of the end for dollar’
In the wake of Western sanctions, Russia has ramped up trade with its ‘friendly’ partners, Putin pointed out. The growing use of national currencies in cross-border settlements, including the energy trade, signals the end of the US dollar as the dominant currency globally, he said. The dollar reserves of the world’s major economies are rapidly shrinking, he said, as are trade settlements using the US currency, while many nations are pitching projects to create new reserve currencies. He noted that Russia never intended to de-dollarize either its domestic economy or the global economy, but was forced to ditch the greenback due to the sanctions policies of the government in Washington. Putin also compared the seizure of Russian assets as something harkening to the Middle Ages, describing the move as a violation of all legal norms.
Quitting oil dependency
The Russian budget has reduced its dependency on oil revenues, the president said, reminding the audience that the country has long strived to diversify its income sources and reduce the share of exports of natural resources such as oil and gas in its budget revenue. “We’ve always wondered when Russia is going to finally reduce its dependency on oil? Here, the trend is gradually gaining momentum,” the president said.
In May, budget revenues not related to the export of oil and gas grew by 28.5%, Putin noted, attributing the growth to further development of the trade and services sectors.
At the same time, Putin pointed out that Russia’s income from oil and gas exports is growing and has exceeded expectations. Since Western nations effectively banned its oil and gas, Russia has redirected its exports to customers such as India and China.
Infrastructure development
The Russian government will continue constructing and upgrading infrastructure, including roadways and railways, overpasses, and bridges. Expanding the capacities of seaports and border checkpoints will also be at the top of the agenda, Putin said. Russia will pay particular attention to the development of the North-South transport corridor and plans to double export traffic along the route. “We plan to double by 2025 and to triple by 2030 the volume of export transportation along this route,” he explained.
Right strategy
The second quarter of 2022 turned out to be “the most challenging” period for the national economy, but the strategy adopted by the Russian authorities and businesses has worked and is gaining momentum. “What we are doing in our economy at the moment, in my opinion, can be applicable in other countries also and this will only reinforce opportunities for our interaction,” Putin stressed.
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