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President of Russia Vladimir Putin: Mr Mishustin, please.

Prime Minister Mikhail Mishustin: Mr President, I would like to report on the economic situation, providing more details about our performance last year. I mentioned yesterday evening that we have received data from Rosstat.

Vladimir Putin: We recently talked about the current economic situation with our colleagues from the economic bloc. As I understand it, you now have the latest data.

Mikhail Mishustin: Yes, the State Statistics Service has provided its initial assessment. According to it, Russia’s GDP has increased by 4.1 percent, which is 0.2 percent above the forecast and our expectations. The figure for December was 4.5 percent. The GDP deflator index for last year is 8.9 percent, or 0.3 percent below the forecast.

According to the update, our nominal GDP for 2024 is record high at 200 trillion rubles, primarily due to the vigorous growth of manufacturing. Overall, industrial production has grown by 4.6 percent, which is higher than all initial estimates.

Rosstat has also updated its data for the previous three years. According to it, GDP growth in 2023 was 0.5 percent higher than the initial estimate of 3.6 percent. The final figure for 2023 is 4.1 percent. The reason for the update was that we waited for annual financial statements from businesses, final information from economic sectors, and annual financial statements from budget funded enterprises.

Mr President, you have said that we met only recently, but you have held many industry-specific meetings where you focused our attention on concrete issues and tasks related to each particular sector. As a result, we have prepared a package of measures and implemented them. Experts and our scientific communities were involved in that. But the biggest contribution was made by our businesses and people, thanks to which our economy has demonstrated sustainable and dynamic growth for a second consecutive year.

It should be noted that our economy has successfully dealt with unprecedented sanctions pressure, unlike many countries that imposed sanctions against us. Some of them are close to stagnation. You are well aware of the situation there.

Regarding the reasons for our growth, it has been bolstered by higher investment and consumer activity. Manufacturing has acted as the steam engine, as we say. It has grown by 8.5 percent, although the initial forecast was substantially lower.

You know that you and the Government are paying special attention to this sector. The share of added value is higher there than in the raw materials sector, and the current statistics show that these efforts have started yielding good results.

Our economy is becoming more technology-based and diversified, which is having a more beneficial effect on macroeconomic stability and overall conditions. As a result, we will be able to fulfil our medium- and longer-term objectives more effectively.

I would also like to say a few words about our economic drivers.

Vladimir Putin: Go ahead, please.

Mikhail Mishustin: The outperforming sectors focused on the domestic market, while the export-oriented ones reported a minor decline. It was only 0.4 percent, which is quite insignificant.

Mechanical engineering was the steam engine of growth in the manufacturing sector. It accounted for about 40 percent of the aggregate output growth, increasing production by nearly 20 percent, or more precisely, 19.5 percent. Transport machine building increased output by 29.6 percent, the automobile industry by 16.5 percent, the computer and electronic industry by 28.8 percent, and the pharmaceutical industry by 18 percent.

Our fuel and energy industry has not yet completed its adjustment period. Our companies are looking for new partners and expanding into new promising markets. You have the details of the situation, and so you know that it will take time and effort. However, last year we managed to minimise the decline, which was below 1 percent, or more precisely 0.9 percent, in the extractive industry. At the same time, the production of electricity, gas and steam increased by 2 percent.

These are quite good results, but it is perfectly obvious that the current challenge is inflation, which was 9.52 percent last year. It is growing, but the aggregate measures we have taken in our monetary policy have started slowing the rate of lending in the economy. You are aware of this, because we have reported to you that the annual lending rate has been decreasing for the past six months, both for individuals and businesses. This is creating the necessary conditions for lowering prices but will simultaneously slow economic growth.

Therefore, our foremost objective, in partnership with the Bank of Russia, is to adopt a highly prudent fiscal and macroeconomic policy. It is conceivable that economic expansion in the forthcoming year may not be substantial; nevertheless, it is imperative to curb inflation and implement all requisite measures – as you have reiterated during our discussions – to unequivocally guarantee long-term economic growth predicated on a stable macroeconomic environment.

A few succinct remarks – this is exceedingly important – regarding real monetary incomes. It has been of paramount importance – and you have consistently underscored this – to prioritise the enhancement of real monetary incomes. We have achieved considerable progress in this regard. Real monetary incomes of the populace have surged by 8.4 percent, surpassing projections. Concurrently, real wages have increased by 8.7 percent over the past 11 months. This implies, in tangible terms, that people have received more – inflation, so to speak, has not eroded their incomes.

Another significant indicator is the unemployment rate. On average, it has not surpassed 2.5 percent over the year and currently stands at 2.3 percent. However, this also presents the challenge of workforce shortages. We are actively addressing this by creating avenues to attract personnel to the sectors that require them.

Mr President, last year, a foundation was established for advancing the country’s development. Most important for us is the fulfilment of all social obligations (this is invariably our paramount priority when you assign tasks) and the attainment of the national development goals that you have set for us, ensuring the technological, industrial, and economic sovereignty of the nation. We will actively persist in our efforts on this front.

I am confident that all the tasks you have set will be realised.

Vladimir Putin: Mr Mishustin, our economic growth rates have not only surpassed our own forecasts but have also exceeded global figures and those of the so-called developed economies. As I observe in the official statistics, the United States recorded a growth rate of 2.8 percent – a generally sound figure. Conversely, in the Eurozone, the performance is more modest: in France – I refer here to Europe’s leading economies – growth stands at 1.1 percent, while the Federal Republic of Germany reports a decline of 0.2 percent. Well, these are, of course, their challenges, and we comprehend their causes. Our focus today, however, remains on our own results.

I consider the result you have cited to be primarily the outcome of the efforts by the workforce, the business community, and, of course, the Government and financial authorities in the broadest sense. I reiterate: this is a satisfactory and commendable outcome.

Our objective for the current year is to transition towards balanced growth and achieve inflation reduction. As you noted, annual inflation stands at 9.5 percent, though as of February 3, this had reached 9.9 percent year-on-year. This presents a challenge, necessitating comprehensive measures to ensure balanced economic expansion.

Nevertheless, it is imperative to sustain growth momentum even amid adjustments to growth rates due to the circumstances you have just outlined. This is entirely normal and anticipated – a matter we have discussed extensively with you and our colleagues.

I would further emphasise the following. During the coronavirus pandemic, the Government executed highly effective sector-specific interventions. As previously discussed, including during meetings with the business community – whose representatives have advocated for this approach – we agreed with the Government to reinstate such sectoral coordination. We must assess the prospects of individual industries, identify priorities, and provide targeted support where required. I reiterate: this must mirror the efficacy demonstrated during the pandemic response. Respective decisions must be grounded in long-term evaluations of critical economic sectors.

One paramount priority remains the development of a supply-side economy. We must restructure the composition of this growth. As I have stated, it is vital to establish new enterprises and jobs across all regions of our nation. Operations at these enterprises must integrate modern management principles, advanced technological foundations – as you yourself consistently emphasise – with the use of robotics, artificial intelligence, and other domestic and global innovations. We must adopt the best practices universally available to enhance labour productivity. This constitutes our key immediate objective.

Furthermore, as agreed, I await the Government’s action plan to advance structural economic reforms. Through this framework, I am confident we will achieve both balanced growth and qualitative improvements in this growth over the short and medium term.

In summary, I reiterate: the results are positive. I am confident that we will maintain the growth rates aligned with our needs, albeit adjusted. Most important, we will undertake all necessary measures to transform our economic structure and ensure the sustained, balanced growth I have outlined.

Thank you.

Mikhail Mishustin: Thank you, Mr President. We will proceed accordingly.

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