Russia's President praises its financial implementation and supports military help

June 19, 2023: On Friday, President Vladimir Putin cited favorable data points to laud Russia’s economic fitness. He said surging defense spending was needed to strengthen national security as Moscow grapples with the cost of fighting in Ukraine.

Putin, speaking at the plenary session of Russia’s flagship St Petersburg International Economic Forum, said the public finances were generally flat, putting the $42 billion budget deficit so far this year largely down to bringing forward some planned expenditures.

Analysts and data, however, suggest that slumping energy revenues and soaring military spending have played a key role.

“Naturally, more funds were needed to strengthen defense and security, to purchase weapons,” Putin said, without mentioning Ukraine specifically. “We were compelled to do this to protect our country’s sovereignty.”

“I should say that, on the whole, this justifies itself from an economic point of view,” Putin added.

Putin used data to argue for Russia’s positive economic prospects, forecasting gross domestic product (GDP) growth of up to 2% this year, citing record low unemployment and low inflation relative to last year’s double-digit acceleration.

That would still leave GDP smaller than at the end of 2021, after last year’s contraction of 2.1%.

The International Monetary Fund forecasts a 2023 growth of 0.7% and expects international isolation and lower energy revenues to dampen Russia’s prospects for years to come.

With hundreds of thousands of working-age men conscripted last year and hundreds of thousands more running the country to avoid mobilization, unemployment is at a record low of 3.3%.

The central bank has repeatedly warned that a labor shortage is exacerbating inflationary threats, and analysts have named it one of the most significant drags on Russia’s economic progress.