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Taking part in the meeting were Prime Minister Mikhail Mishustin, Chief of Staff of the Presidential Executive Office Anton Vaino, First Deputy Prime Minister Andrei Belousov, Deputy Prime Minister Marat Khusnullin, Presidential Aide Maxim Oreshkin, Minister of Economic Development Maxim Reshetnikov, Minister of Finance Anton Siluanov and Central Bank Governor Elvira Nabiullina.

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Opening remarks at the meeting on economic issues

President of Russia Vladimir Putin: Good afternoon, colleagues.

As previously agreed, I suggest discussing current economic issues, the state of affairs in the real sector, and the dynamics of the key macro indicators.

In addition, our agenda includes the Government’s forecast for Russia’s socioeconomic development which we use to develop measures to support citizens, entrepreneurs, corporate labour and entire industries, and of course, to form the federal budget which is country’s main financial document.

As a reminder, when drafting the current budget, the Government based it on a projected 2.9 percent decline in the GDP last year and 0.8 percent this year.

Against the backdrop of positive statistics, our colleagues have revised their estimates up significantly.

Notably, the forecast for the socioeconomic development for the coming years must be as objective as possible which is important for the public administration system and the domestic economy.

As I said earlier, positive economic trends are continuing to grow. According to operational data, retail trade has been up by almost 25 percent since early April.

Railway loads are up as well. You and I are well aware that this is one of the most important indicators of what is happening in real life. In March, this indicator stood at about 2 percent, but in early April it was already 3.6 percent, both for domestic and export transportation.

There are reasons to believe that economic activity will continue to grow, which we can see from an important parameter like the business activity index. In March, it stood at 56.8 points, which is the third highest figure ever and clearly indicates the growing optimism and positive outlook of domestic business.

Overall, it can be said that the Russian economy continues to grow fast as part of the new growth model. As of late April, Russia's GDP will have grown a lot in real terms.

These economic dynamics are reflected in the budget indicators as well. In the first quarter of this year, the country's consolidated budget revenues exceeded 13 trillion rubles which is in line with last year's figures, but the dynamics are good overall.

Notably, non-oil-and-gas revenue grew by about 14 percent, or 1.4 trillion rubles, while oil-and-gas revenue is slightly down by about 1.3 trillion rubles, which is primarily due to the high base and pricing environment specifics on the global markets last year.

As expected, the situation will have changed by the end of the second quarter when oil prices will rise, and extra oil and gas revenue will begin to flow into the budget.

However, I would like to reiterate that the external risk factors for our economy have not gone away, and we are well aware of that. It would be a mistake for us to ease up and let things take their course, assuming that they will take care of themselves. We cannot afford to let this happen.

It is important to constantly monitor the effectiveness of our support for industry and the industrial sectors, small and medium-sized companies, to identify problem areas in time and to promptly resolve emerging business-related difficulties, and to lend a hand to enterprises and labour teams.

The situation remains difficult in the automotive industry and the timber processing industry, as well as in the production of chemical products and fertilisers.

We have held several industry-specific meetings, and we came up with specific solutions that will increase the absorption of idle production capacity and ensure the marketing of their products, etc.

I would like the Government to implement these agreements in a timely manner and maintain feedback with our colleagues on the ground, and to constantly analyse the situation in order to understand which areas need additional effort.

Today, we will focus separately on housing construction.

As you are aware, last year our developers reached record levels in terms of new housing. However, clearly, certain imbalances are beginning to transpire on the real estate market with overstocking, which may lead to construction cuts in the future. Of course, these risks must be reduced. I will not go into detail at this point, but I hope we will address this issue later today.

It is necessary to ensure the sustainable and long-term development of the construction sector and, above all, to support the demand for housing.

As you may be aware, we have renewed the low-cost mortgage programme at 8 percent interest through July 1, 2024. In addition, we have improved the affordability of family mortgages at an interest rate of 6 percent. Earlier, families with at least one child born after January 1, 2018, could participate in this programme, whereas now the programme for all families with two or more minor children is guaranteed.

Since the beginning of this year, 132,500 families have improved their living conditions through family and low-cost mortgage programmes.

I look forward to hearing a detailed report on the situation in the real estate market, including possible additional support measures.

Now, a few words about inflation. As of April 3, I discussed this with the Central Bank Governor not long ago, and she confirmed that inflation had dropped to 3.3 percent in annualised terms and it is expected to drop below 3 percent by the end of the month. For the first time in a long period inflation was below the Central Bank’s target.

I would like to repeat: it is important to avoid not only excessive acceleration of inflation, but its excessive slowdown as well, since the latter can negatively affect economic activity overall – we are all well aware of this – and can also affect business plans to expand production, to develop innovative types of products and to create jobs. Of course, it affects individual incomes and budgetary receipts as well.

From the perspective of consumers, low inflation is, of course, a very positive thing as it leads to an increase in real incomes and real wages. This, of course, is a positive factor, but we must look at it from all points of view. It is important to take into account all factors that affect consumer prices, including the ruble exchange rate, the situation on of the foreign exchange market, and the movement of capital.

Let me remind you that in the second quarter of last year, the Bank of Russia and the Government restricted the export of capital, and that helped reduce certain threats to our financial system and ensure its stability.

Later, some of the restrictions were lifted or relaxed based on the objective picture. I suggest reviewing these capital controls with our colleagues from the Central Bank now to see how they are working and what impact they are having on our economy.

And the last point. One of the key issues to overcome today is the shortage of personnel. We've been talking about this a lot lately.

Despite all the challenges Russian companies faced last year, they avoided massive layoffs and kept their teams onboard.

Now the situation has changed dramatically. With unemployment at an all-time low of 3.5 percent across Russia, there is a shortage of workers in many industries.

There are three main tasks to be tackled here.

One is to tap the personnel potential of the Russian regions and cities where the unemployment rate remains high. We have such regions.

Second. We need to widely introduce lean manufacturing and automation technologies in all sectors of the economy and in the social sphere, and accordingly, take advantage of additional internal personnel reserves.

Finally, it is important to increase investment in the training of specialists in the most important and in-demand professions.

We have already agreed to expand the Professionalitet programme, to further develop engineering schools, build new university campuses and increase funding for the Priority 2030 programme.

However, all these are long-term projects, but today, it is especially important to support short-term programmes, because they concern what needs to be done right now. Even now, they provide opportunities to learn new things and skills, and change careers.

In this regard, I would also like to note the Let's Earn Together pilot programme that the Sakhalin Region is implementing. It offers local residents short retraining courses where they can acquire new competencies. I ask the Ministry of Economic Development to scale this positive experience and extend it throughout the country.

In conclusion, I would like to note that the labour market will become one of the key subjects at the upcoming St Petersburg Economic Forum. I ask my colleagues to carefully study the issues we are currently facing. It will be important for us to present our proposals in this important area so that every interested party across Russia will hear them. This is something every Russian is interested in, but we should also let our foreign partners know about our immediate plans.

Let's get to the agenda. I am giving the floor to Mr Reshetnikov.

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