The Russian economy is moving to a qualitatively different level of development – it will not depend on the external conjuncture and demand, but will form it itself. This was stated by Vladimir Putin during his speech at the St. Petersburg International Economic Forum. The President noted that the strategy chosen by the state after the introduction of Western sanctions has worked, and positive macroeconomic trends are gaining momentum.
Russian President Vladimir Putin spoke on Friday at the plenary session of the St. Petersburg International Economic Forum (SPIEF). His speech was devoted to the development of Russia and the country's plans in various directions. Most of the speech was about the economy – the president spoke about how Russia's economic system has withstood the pressure of sanctions, about business support, the possibility of returning departed world brands, changes in foreign trade, and indicated what the new Russian economy should be in general.
Putin believes that the domestic economy should not just respond to market conditions, but generate demand itself. "In fact, we are talking about a transition to a qualitatively new level of development – a sovereign economy that not only reacts to market conditions and takes into account demand, but also forms this demand itself," the head of state said. – Such an economy, it is often called the supply economy, involves a large–scale increase in productive forces and the service sector, the widespread strengthening of the infrastructure network, the development of advanced technologies, the creation of new modern industrial capacities and entire industries, including in areas where we have not yet proved ourselves properly, but the opportunities for this are scientific opportunities Of course, we have creative potential."
The President is convinced that "the economy should become an economy of high wages with new requirements for the vocational education system, with an increase in labor productivity, including on the basis of automation and new management systems, with high-quality modern workplaces and working conditions."
The president called the second quarter of 2022 the most difficult period for the Russian economy after the start of its economic development, but added that the strategy chosen then worked and is gaining strength – the authorities were able to maintain a responsible and balanced monetary policy. He highlighted the unprecedented low unemployment rate of 3.3%.
Social support
The financial capabilities of the country, the President assured, allow us to keep a confident course towards maintaining social justice and reducing poverty. Last year, 1.7 million people left the poverty line in Russia, and ensuring social justice has become an important factor for successfully overcoming problems. The authorities are providing targeted assistance to the least well–off citizens, their incomes have increased by about 30% over the year, and the poverty level has fallen below the double-digit mark - it amounted to 9.8%.
Putin also recalled that from January 1, 2024, the minimum wage will be increased by 18.5%, which will be much higher than the rate of inflation. Its indexation in Russia continues at a faster pace in order to increase the separation of the minimum wage from the subsistence minimum. So, from January 1, 2023, the minimum wage was increased by 6.3% to 16 thousand 242 rubles per month, therefore, from January 1, 2024, another indexation will be carried out immediately by 18.5%. At the same time, the head of state noted that by 2030 the minimum wage should increase at least twice. After that, he expressed confidence that this would be an additional incentive for the growth of wages in the country as a whole.
The President also proposed to pay child benefits and a single child benefit for the entire period for which they are assigned, even with an increase in family income. Another initiative of the President is to support citizens who take care of disabled children. "Today they are also entitled to benefits only if they do not work, have no other source of income. Even if you want to earn extra money, you can't do this – then you will lose your allowance. It is necessary, of course, to remove these restrictions, namely: to keep the care allowance for part-time employment of such citizens. And so that there are no discrepancies here, it is necessary to consolidate the concept of "part–time employment" in the law," Putin said.
Strength test
In his speech, the President recalled that a year ago the mood in our business circles was very, very wary. And this year, economic growth is visible: in April, the gross domestic product grew by 3.3% in annual terms, and by the end of the year it can add more than 1%. Industrial growth was also noted in April. Moreover, the volume of output in the manufacturing industries in January – April exceeded last year's values by 2.9%, although this particular area was under the strongest blow due to the rupture of cooperative ties and chains.
The Head of State also praised the banks that have passed the test of strength. In 2022, the volume of lending to legal entities increased by 14.3%, and for citizens – 9.5%. The growth rate of loans to legal entities in April 2023 was already 17.1%, and to individuals – 12.9%. "These are good indicators," Putin stated, adding that mortgages are growing at a faster pace, their growth is 18%.
Deliveries of the agro–industrial complex of Russia abroad in 2022 showed a new maximum - more than $ 41 billion. According to the President, Russia has been consistently among the top five grain exporters for ten years, since 2016 it has been the largest supplier of wheat and firmly holds the first place in world markets.
"There is reason to believe that this year our companies will take another step forward: they will rewrite and update the record for the export of this crop. At the same time, Russia will actively participate in ensuring global food security and provide assistance to countries, including African ones, that are experiencing food shortages," Putin stressed.
Speaking about the situation in the field of oil and gas, the President noted that Russia is gradually moving from European to other markets. "We don't see any catastrophe here," the head of state stressed. According to him, the current situation forces our companies to act more energetically: to look for new logistics, to look for new partners, to acquire assets abroad, to process oil into petroleum products. "In general, the Russian oil and gas market is in good condition and has brilliant prospects for development," Putin said.
The Head of State also promised Russian business to reduce administrative pressure: "I believe that if a business is not associated with high risks of harm to citizens or the environment, then it should not be checked at all – neither in a planned manner, nor in an unplanned one. There are enough preventive measures."
Transition to domestic
The Head of State also drew attention to the topic of foreign brands that have left Russia. The country was predicted to return to a closed economy, Putin recalled. "Last year, we were predicted that under the pressure of sanctions, Russia would return to a closed, administrative-command economy. But, as you know, we have chosen the path of expanding the freedom of entrepreneurship, and practice has shown that we did absolutely the right thing. Life has proved it," the president said.
Another incentive for business was the replacement of multinational corporations that left the Russian market. Putin stressed that Russia "did not expel anyone," foreign companies were forced to leave because of the powerful sanctions pressure.
He noted that many foreign brands have long been selling products that are fully manufactured at Russian facilities. Moreover, the profit from such business remains in the country. "If at first our entrepreneurs, I would say, were very worried about the departure of Western companies, now they occupy vacant production facilities and sites in shopping centers. Some small, so–called niche brands that used to sell clothes, shoes, and other goods through social networks are now opening their own stores," the president said.
In this sector, foreigners mostly left, freeing up to 2 million square meters of retail space and a niche for 2 trillion rubles.
"Bottlenecks"
Serious attention was also paid to infrastructure issues. "We will continue to build and update infrastructure facilities: roads and railways, overpasses, bridges. We will continue to expand bottlenecks – of course, we also have enough of them, increasing the capabilities of seaports will be the focus of our attention, border checkpoints," he said. The President noted that the volume of construction work has been growing for five years in a row.
The country will also upgrade its merchant fleet in the next five years, 260 ships are planned to be built for this, funds for this will be attracted from the National Welfare Fund. The President also spoke about plans to triple the volume of export traffic on the North–South route, and in the eastern direction – by 100 million tons by the level of 2022.
As for foreign partners, it will be easier for them to open bank accounts. They "won't even need a personal presence," although they will have to comply with all the requirements of the so-called anti-washing legislation.
Fifth place in the world
In the coming years, Russia will not only retain sixth place among the ten leading economic powers of the world, but also has a chance to even rise higher, the head of state said during his speech at the SPIEF: "There is no doubt that in the coming years we will retain this really sixth place, if we count GDP at purchasing power parity. These are China, the USA, Japan, India, Germany and Russia."
At the same time, the President noted that negative processes are now being observed in the locomotive of the European economy – Germany: the economy is expected to decline by 0.7%, unemployment and inflation are growing.
Denazification of Ukraine will continue
In addition to the economy, the President also spoke about the course of a special military operation. He said this already during a conversation with journalists after the plenary session. Ukrainian troops have not achieved success in any of the areas of the counteroffensive and are suffering heavy losses. At the same time, he noted the successes of the Russian military, which destroyed five American Patriot anti-aircraft missile systems near Kiev.
Putin also warned that if Ukraine does not stop attacks on Russian territories, the country will consider the possibility of creating a "sanitary cordon" on Ukrainian territory. "They should just understand what they are all leading to. We are working on military targets with high-precision long-range, high-power weapons and are achieving success in these areas. It is enough to see how the warehouses with weapons, the locations of personnel, including foreign mercenaries, are destroyed, it is enough to see how our equipment works in this direction. There is always an answer, it's just that we often don't even promote it, but it's sensitive, this answer, and the enemy knows about it," Putin said.
The moderator of the discussion, political scientist Dmitry Simes, told Putin that the greatest irritation of the "collective West" is caused by the statements of the Russian president about the need to denazify Ukraine: "What are you talking about? Zelensky is a Jew. He is the legitimately elected president, and it is obvious that he is on the side of everything good – Western, against everything bad – Russian. So it's not for you to say at all that he's on the side of the Nazis. How do you answer that?"
"I have many Jewish friends since childhood. They say: Zelensky is not a Jew, this is a disgrace to the Jewish people. This is not a joke, not irony, you know? After all, neo-Nazis, the last of Hitler, have been elevated to the podium as heroes of Ukraine today. The Holocaust is the destruction of six million Jews, one and a half million were destroyed in Ukraine and above all by the hands of Bandera," Putin replied.
The President recalled that Russia suffered more than others in the fight against Nazism – and will never forget it. Therefore, one of the key tasks of Russia in the course of its own is the denazification of Ukraine. "We have every right to believe that the task of denazification of Ukraine set by us is one of the key ones," he said.
Evgeny Romanov
