The Russian President, Vladimir Putin gave his annual public Q&A address yesterday, with him fielding questions from across Russia, including the general public and journalists. 2.2 million questions were received, ranging from the situation in Ukraine, which tended to dominate, to personal issues such as ‘What do you dream about?’ And what artworks he has in his office (a bust of the scientist Lomonosov). The total session lasted over 4.5 hours. In this report we focus on Q&A that were asked relating to the Russian economy, and the development and purpose of the BRICS.  

Q: These days, everyone has been feeling a disturbing sense that the world is going crazy, or already has, because the potential for conflict is off the charts in every part of the world, and the global economy is struggling. How does Russia manage not only to stay afloat, but also to continue growing in this situation?

VP: “You know, when all is calm and life is measured and stable, we get bored. This amounts to stagnation, so we crave action. When action begins, time starts whistling by – or bullets do, for that matter. Unfortunately, bullets are what is zipping past our heads these days. We are scared, yes – but not as “all get out” kind of scared.

Our economics are the ultimate measure of things. Although your question was a bit provocative, I will turn to the economy anyway. The economy is number one; it is the cornerstone. It has an impact on living standards, general stability, and the country’s defence capability. The economy is everything.

The economic situation in Russia is generally positive and stable. We are growing in spite of everything, in spite of any external threats or attempts at outside influence.

Last year Russia increased its GDP by 3.6%, and this year the economy is expected to grow by 3.9% percent, or possibly even 4%. However, we will have to wait and see the final results, as the year-end figures will be de facto factored into these projections in the first quarter of next year. It may well be that this indicator reaches four percent. What this means is that our economy will have grown by 8% over the past two years. After all, the tenths and hundredths of a percent make for a negligeable difference. This is what experts have been telling me – we exchanged views this very morning. About 8% over the past two years, compared to a growth rate between 5-6% for the United States, 1% for the Eurozone, and zero for Germany, the EU’s leading economy. It seems that next year Germany will also have zero growth.

International financial and economic institutions ranked Russia as Europe’s biggest economy in terms of volume, in terms of purchasing power parity, and the world’s fourth largest economy. We are behind China, the United States and India. Last year, Russia surpassed Germany and this year, we left Japan behind. But this is not the time for us to be complacent. We will keep moving forward.

There is development everywhere you look and so much positive momentum across the board. If the Eurozone has fallen asleep, there are other centres of global development that are advancing. The situation in the Eurozone and the United States has been changing too. We must maintain the momentum we have gathered and transform our economy at its core, from a qualitative perspective.

There are other general performance indicators which have been quite satisfactory, to say the least. Unemployment is the first such indicator. All countries around the world, and all economies, pay a great deal of attention to this figure. For Russia, it is at its all-time low of 2.3%. We have not experienced anything like this before. This is my first point.

Second, there has been growth in specific manufacturing and industrial sectors. In fact, industrial output increased by 4.4%, while the processing sector reported a growth rate of 8.1%, with some of its sectors achieving even higher growth rates.

Of course, inflation has been causing some concerns. Only yesterday, while preparing for today’s event, I talked to the Central Bank Governor, and Elvira Nabiullina told me that the inflation rate has already reached about 9.2–9.3% year-to-date. That said, salaries have increased by nine percent, and I am talking about an increase in real terms, minus inflation. In addition, disposable incomes have also increased. So, the overall situation is stable and, let me reiterate, solid.

There are certain challenges with inflation and with the economy heating up. Therefore, the Government and the Central Bank have been seeking to ensure a soft landing. Estimates may vary for next year, but we expect the economy to grow at a rate of 2–2.5%. This soft landing would enable us to keep improving our macroeconomic performance.

Overall, the economy can be described as stable and resilient.”

RPA: Measures to prevent overall economic heating being introduced, with a managed GDP growth slowdown to 2-2.5% for 2025.     

Q: You have cited Germany and Japan as examples. I wish to focus on Germany having a zero percent growth rate, which you mentioned as a case previously known for its economic expansion.

Do you believe this is perhaps linked to politics and sovereignty? Not long ago, at the VTB Forum Russia Calling! you reminisced about Gerhard Schroeder’s birthday celebration, remarking how all the songs were in English, with none performed in German.

VP: “There were. It’s an interesting episode. It was Gerhard Schroeder’s birthday, he invited me and I attended. There was a small concert, and, as it happened, all the companies performed in English. I remarked at the time, “Even the Hannover girls’ choir sang in English.”

There was, however, one ensemble that performed in German: the Kuban Cossack Choir, which accompanied me. Moreover, this was entirely unexpected on my part. I inquired, “How did you come to know these songs?” They replied, “Out of respect for the Germans, our hosts, we learnt these songs en route and performed them in German, including those from the local region where we are now.”

During the intermission, numerous attendees approached me and said “We are embarrassed that only Russian Cossacks performed in German here.”

You see, sovereignty is a crucial concept; it must reside within, in one’s heart. In the post-war era, I believe this sense – of homeland and sovereignty – has been somewhat eroded among the German people. Who are the Europeans, after all? They are proud to be European, yet they are foremost French, German, Italian, Spanish, and then European. There is a tendency to smooth out things, to homogenise. Ultimately, this affects everything, including the economy.

I previously spoke about our economic growth – this is largely attributable to the reinforcement of sovereignty, which extends to the economic realm.

Many foreign manufacturers have exited our market. What has been the consequence? Our entrepreneurs have started producing these goods domestically, necessitating further research and the engagement of institutions, including those focused on development. All of this – what we are discussing – is the enhancement of technological sovereignty.

Sovereignty manifests itself in various forms: defence, technology, science, education, culture. This is of paramount importance, especially for our nation, because should we lose sovereignty, we risk losing statehood. Economic growth is also an effect of bolstered sovereignty.”

RPA: The EU will perceive these comments as an attempt to divide it, however, nationalistic differences remain problematic amongst an overall homogenisation of the EU, an issue already seen with Brexit. National identity within the EU is resented by Brussels, however the consequences of suppression may also be profound. Putin’s anecdote may have uncovered serious identify problems with the concept of sovereignty. Linking this to GDP performance is an interesting observation as concerns its impact on national pride, with Putin’s academic linking of the two suggesting a bland EU results in a bland economic mentality.

Q: You spoke about economic growth. It is true that a look at our economic indicators, which do look good, shows that the majority of Russian enterprises are working to capacity and wages are rising, yet they cannot keep pace with price increases.

Many Russian citizens have written about this, and AI has analysed all the requests and compiled a list of regions where more questions concerned price growth. These are eastern regions, such as the Kamchatka Territory and the Sakhalin Region, and also our westernmost territory, the Kaliningrad Region. Also, the majority of questions from the Irkutsk Region concern price growth.

Moderator: It is topical. I will cite the figures which have also been provided by GigaChat, which we are using. The most frequent questions have to do with the rise in prices of bread, fish, milk, eggs and butter. People also write about the growth of fuel prices. This file contains some of the citizens’ questions about price growth.

If we look at the official data of the Federal State Statistics Service (Rosstat), we will see that the prices of fruits and vegetables have increased by 3.4% over the past week. For example, the price of cucumbers has grown by 10% after rising by 43% in November.

VP: “First, I would like to apologise to the audience, especially those who are following this event via various media platforms, including online. When I said that price growth or inflation was slightly above 9% this year, at 9.2–9.3%  and that people’s wages and real disposable incomes have grown as well, I cited average figures. Of course, our country is very large, and some people might ask me what I was talking about, that their well-being has not improved but remained at the same level. And some might even say that their well-being has deteriorated. Yes, this can be so, and it is so, in some cases. I cited average figures, because when we make plans, we need to have figures to rely on, and we can only rely on average figures.

As for the growth of prices, there are both objective and subjective reasons for that.

What is more important is that the supply in our market should correlate with people’s incomes, or rather, people’s incomes and their purchasing capacity should correlate with the volume of goods produced in the country. Wages and incomes have been growing faster than the mass of commodities and the rate of production.

I will explain. Let’s say, food production in our country is constantly growing. I will talk about this later. There will certainly be questions on agriculture. In fact, I can tell you that it adds 3% every year. We are fully self-sufficient when it comes to meat. 100%.

It is a good indicator. Why does this happen? In Russia, the annual consumption of meat is about 80 kg per capita while in other countries, it is about 42 kg on average. It may seem enough and yet, meat consumption has doubled recently, you see? Doubled.

Now, milk. Milk production grows every year, but consumption grows as well, and there is not enough milk to produce butter. I know that the butter prices have grown by 33–34% in some regions, and possibly higher in others.

Simply put, the production of goods has not grown as much as consumption has. This is the first reason. The solution here would be to develop industries, and the government is providing investment to correct this. The second objective reason is harvest.

The third objective reason is that some products have become more expensive on world markets.

Of course, the external restrictions, sanctions and so forth are affecting the prices to a certain extent. They do not play a key role but still, they take a toll as they make logistics more expensive, in addition to other things.

There are also subjective reasons or things we could improve on our side. For example, some experts believe that the Central Bank could have used certain instruments other than raising the key rate, more efficiently and at an earlier stage. Yes, the Central Bank started doing it around summer. But again, these experts believe that it could have and should have been done earlier. There are many instruments. I will not list them now and will not tire our audience with these considerations about the Central Bank and its regulation methods.

The Government works efficiently and does a lot when it thinks about the future – and the future should always be considered. In our country, we always thought about the future even during the harshest times of World War 2. We know these examples. There were efforts made and, as it turned out later, correct efforts.

Our Government does think about the future: it formulates tasks, national development goals and national projects. It is wonderful but it would also be great to take timely efforts with respect to industries and consider the development of certain sectors, the production of mass products. I will not list them now – perhaps, there will be questions on specific industries later. Timely decisions should have been made.

Growing prices are not something to enjoy and they have adverse impacts. But I hope that overall, as we preserve macroeconomic indicators, we shall address these issues as well because macroeconomics is the basis for a healthy economy in general.”

Q: Russia recently hosted the BRICS annual summit in Kazan. Do you think that Kazan could become the seat of the BRICS headquarters? Of BRICS as a whole or its Russian part?

VP: “We are not planning to establish a headquarters now. There are several instruments that have been created and are working in the interests of the BRICS group.

Some have said that the BRICS has evolved into a tool for countering the West. This is not true; BRICS is not a tool for countering the West. Our work is not aimed against anyone. We focus on our own interests and the interests of the group’s member countries. Giving BRICS any kind of a confrontational agenda is not what we are after.

This group has grown within a very short period of time and expanded its ranks. As you know, and we have mentioned this many times, many countries have expressed interest in developing the BRICS format.

Why? Because ensuring reciprocity, mutual respect and respecting each other’s interests have been our core guiding principles in this effort. We adopt all decisions by consensus, which is a very important point. There are no small or big countries within BRICS, no countries that are more or less developed: this is a group based on common interests. And there is one common interest: development. We try to identify available tools and create new ones for generating more economic growth and transforming the structure of the economy in order for it to be in step with the global development agenda, ensuring that BRICS countries and the group as a whole are at the forefront of this progressive movement. This is the way we will be operating.”

RPA: Defining the overall BRICS goal as ‘development’, a completely different attitude to Western descriptions of it being ‘confrontational’, or a ‘threat’, an issue that suggests rather more about Western negativity of thought than about the BRICS nations.   

Further Reading

Putin’s Presidential Inauguration Speech: National Development Plans & Russia To Become World’s Fourth Largest Economy By 2030