At the Saint Petersburg International Economic Forum, held from June 18 to 21, President Vladimir Putin made a categorical declaration: “Under no circumstances should Russia fall into recession.” The Kremlin leader’s confidence, delivered on June 20 from the main stage of his hometown forum, contrasted sharply with the more reserved atmosphere behind the scenes. As Le Monde reports, participants and observers at what has been dubbed the “Putin Davos” were far less certain.
According to official data, Russia’s GDP growth slowed to 1.4% in the first quarter of 2025 — the lowest figure since mid-2023. Minister of Economic Development Maxim Reshetnikov bluntly stated: “Russia is on the verge of recession,” pointing to both business sentiment and data that indicate a “noticeable slowdown.”
At a key panel discussion alongside other top economic officials, Reshetnikov played the role of Cassandra, sounding the alarm. Meanwhile, Finance Minister Anton Siluanov tried to inject confidence, insisting: “After winter, summer always comes.” He reiterated that Russia’s economic model remains functional, driven by military production and investment linked to the ongoing “special operation” in Ukraine. Siluanov acknowledged that the budget deficit will reach 1.7% of GDP by the end of 2025 — three times more than originally forecast in the 2024 budget law — but stressed that investment activity remains high, which he sees as a driver of future growth.
The Complex Role of the Central Bank
Central Bank Governor Elvira Nabiullina took a more cautious stance. She described the current economic state as “overheating,” warning against excessive optimism. With the key interest rate still stuck at 20% — a strict monetary policy aimed at curbing inflation — the economy’s growth potential is being stifled. At such high borrowing costs, companies struggle to secure loans for investment. Inflation remains above 10%, driven by the impact of Western sanctions and soaring military orders. The Kremlin’s target of keeping inflation at 4% still seems distant.
Nabiullina issued a rare and stark warning: “A large part of the resources that enabled the Russian economy to grow relatively quickly over the past two years have been exhausted. We must think about a new model of economic growth.” Her call was met with skepticism. As Andrei Makarov, head of the Duma’s budget committee, dryly remarked: “Two years ago, Vladimir Putin already called for structural reforms. And what do we have today? Fewer products, higher prices, and worse quality.”
A Forum Framed by “Victory” and the Return of the U.S.
Despite such warnings, the overall mood at the forum echoed the Kremlin’s agenda: patriotic rhetoric, confidence in “victory,” and upbeat economic proclamations. One of the emblematic figures of Russia’s new upper class, 30-year-old entrepreneur Anton Andreichikov — co-founder of an animation studio — expressed satisfaction: “We’re living well. Even better over the past three years,” adding that he was pleased to see American investors returning to the forum.
According to Le Monde, one of the most discussed sessions was the Russia–U.S. roundtable. No contracts were signed, but the mood was warm. Participants welcomed the renewed U.S.–Russia dialogue following President Donald Trump’s return to the White House. Deputy Prime Minister Denis Manturov pointed out: “Only 30% of American companies present in Russia have left in the past three years — far fewer than European firms.”
Manturov was particularly proud of the government’s industrial policies: “Today, we produce much more locally than before 2022,” he told Le Monde. Emphasizing openness to international investors, he added: “American companies are just as welcome in Russia as European ones — as long as they respect our values and do not come here as colonizers.” This remark, Le Monde notes, was a clear challenge to former Western partners who continue to keep their distance from Russia.
Behind the public optimism and official messaging of “victory,” the reality of Russia’s economy appears increasingly fragile. Military expenditure, growing isolation, and ongoing sanctions exert enormous pressure on the economic system. Meanwhile, the Kremlin seeks to project stability and present its economic model as effective. But as Le Monde highlights, even voices within the system are acknowledging the depletion of past growth drivers and the urgent need for reform. Without meaningful change, the “summer” that Siluanov promises may never come.
This article was prepared based on materials published by Le Monde. The author does not claim authorship of the original text but presents their interpretation of the content for informational purposes.
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