The Russian President Vladimir Putin has addressed Russia’s business leaders concerning Russia’s economic strength and strategic goals. Saying that the Russian economy has demonstrated buoyant growth despite unprecedented external challenges, he stressed that he appreciated the contribution of the business community and proposed more engagement on strategic goals. Here are some key takeaways from Putin’s speech at the event, which took place in Moscow on Thursday (April 25).

Strong Dynamics

A country’s success, including on the battlefield, depends on how quickly technological challenges are resolved, Putin said. “And we are making it!” he told the gathering.

Russia’s economy has been positively dynamic, he reported. Gross Domestic Product (GDP) has demonstrated “good growth” in the first months of this year, following 3.6% growth in 2023, he said. In January 2024 GDP growth was 4.6% in annual terms and, in February, 7.7%. “Despite the unprecedented challenges we have faced in recent years, positive trends are strengthening in the domestic economy,” he told the audience.

Unemployment At An Historic Low

The Russian economy has gained strong momentum, which could be seen from the state of the labor market. Unemployment remains at a historic low of less than 3% and has also fallen among young people. “The growth in employment … among other things is the result of the efforts of businesses, companies, and the entire business community,” Putin emphasized. The average monthly salary in real terms increased by 8.5% in January, and real incomes in 2023 rose by 5.4%. Touching on a projected shortage of personnel in Russia, the president said this cannot be covered by migrant workers, and called for other approaches to be taken.

Greater Business Transparency

The Russian president urged that relevant authorities ensure maximum transparency for the conduct and development of business in the country. Every opportunity exists, he said, including “solid state resources and the potential of domestic business,” to implement the planned initiatives.

“The government will continue to support businesses so that they launch promising projects, increase capital investment, and create new jobs,” the Russian leader told the union congress.

Tax Adjustments

The president cited tax system reform as key among important steps to improve the investment climate in Russia. He noted that new tax conditions should be fixed for longer terms.

“Modernization of the fiscal system should ensure a more equitable distribution of the tax burden, while stimulating businesses that develop and invest, including in infrastructure, social, and personnel projects. In short, it is necessary to ensure stable and predictable conditions for reliable, confident business operation,” according to Putin.

Privatization

Putin recalled that law enforcement agencies have recently initiated proceedings to return some assets to state ownership.

“I would like to emphasize that this is not about revising privatization, we talked about this at the previous meeting, but about cases when the actions or inactions of the owners of enterprises and property complexes cause direct damage to the country’s security and national interests,” the president explained.

Industrial Growth

“Over the next six years, we need to radically … increase the volume of industrial production. Moreover, new enterprises, including high-tech ones, in critically important areas should appear literally everywhere,” Putin reiterated.

Companies that implement individual projects could use special state-support measures, which would be gradually expanded, he said. In particular, additional resources will be directed to the development of industrial mortgages.

“Russia’s strategic task is to increase the production of goods and services, primarily on its own technological base,” the president emphasized.

Supporting Data  

Putin’s address can be read in full here.

Russia’s GDP growth is expected to be 2.8% this year, according to the Russian Central Bank, while the IMF also suggest it will grow at a faster rate than Western economies.   

Russia’s Purchasing Managers Index (PMI) rating, which assesses manufacturing optimism, currently stands at 52.7 according to Trading Economics. To compare, Germany’s is at 50.5, France is at 49.9, the UK at 48.7 and the United States at 49.9.  Figures below 50 represent a contraction in manufacturing sentiment.

Further Reading

Russian Economy At Investment Grade: Central Bank