Russian economic growth exceeding global average – Putin at SPIEF

The trend has largely been driven by non-resource sectors, the president has said

The Russian economy is growing more quickly than those of other major global powers and is doing so without a reliance on oil and gas, President Vladimir Putin said on Friday.

Speaking at the plenary session of the St. Petersburg International Economic Forum (SPIEF), Putin noted that Russian GDP expanded by 3.6% last year, bouncing back from a 1.2% downturn amid Ukraine-related sanctions in 2022. This year the economy has continued to expand, the president stated. 

“For the first quarter of this year, growth reached 5.4%. That is, our growth rates exceed the world average,” Putin said. He also pledged significant structural changes to achieve “a new quality and content of economic growth in Russia.”

Putin said the trend stems largely from non-resource-based industries. According to the Russian leader, in 2023 over 40% of GDP growth came from basic industries such as manufacturing, construction, logistics, communications, and agriculture, while some 60% was from supporting industries such as trade, hospitality, and financial services. 

He noted that Russia had set a goal of joining the four largest global economies, and had apparently achieved this. According to World Bank estimates released last week, Russia now ranks as the world’s fourth biggest economy based on purchasing power parity, surpassing Japan and Germany. However, according to Putin, the country must not ease off with its efforts to develop further.

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“I would like to note that it is not a matter of GDP estimation and calculation systems… We are somewhere nearby: Russia, Germany, Japan – the difference is small. We are ahead, but the difference is small,” Putin said. It is now vital to “ensure consistently high rates and quality of growth in the long term” to maintain Russia’s position, he added.

Russia has faced multiple rounds of Western sanctions since the start of its military operation against Ukraine in February 2022. The measures have ranged from blacklisting most Russian banks and cutting them from the international SWIFT interbank messaging system, to freezing some $300 billion in Russian foreign exchange reserves.

Many analysts have attributed Russia’s steady economic growth in the face of these challenges to its pivot towards markets in Africa, the Middle East, and Asia, as well as fiscal changes adopted by the country’s financial authorities.

The International Monetary Fund (IMF) in April said it expects the Russian economy to grow faster than all advanced economies in 2024. According to its projections, the country’s GDP is forecast to expand by 3.2%, exceeding the expected growth rates for the US (2.7%), the UK (0.5%), Germany (0.2%) and France (0.7%). Russian Finance Minister Anton Siluanov earlier said he expects GDP growth in 2024 to equal that of last year, while the Bank of Russia has put it at 2.5-3.5%.