ST. PETERSBURG – On Friday, President Vladimir Putin praised Russia’s economic outlook, stating that it has successfully managed to control inflation and reduce its dependence on energy exports.

His optimistic remarks during a speech at the St. Petersburg International Economic Forum stood in contrast to more serious comments from some government members, who cautioned at the same event that Russia could be on the brink of a recession. Economic Minister Maxim Reshetnikov had indicated on Thursday that the nation is “on the brink of going into a recession.”

Putin acknowledged the recession warnings but stressed that “it mustn’t be allowed.” He noted that there has been steady growth in manufacturing industries, which has enabled the country to decrease its dependency on oil and gas exports.

“The perception of Russian economy as based on raw materials and dependent on hydrocarbons exports have clearly become outdated,” Putin said, adding that the economy grew by 1.5% in the first four months of 2025 and inflation has dropped from double digits to 9.6%.

Putin has used the annual forum to highlight Russia’s economic prowess and encourage foreign investment, but Western executives have shunned it after Moscow sent troops into Ukraine in 2022, leaving it to business leaders from Asia, Africa and Latin America.

The economy, hit with a slew of Western sanctions, has so far outperformed predictions. High defense spending has propelled growth and kept unemployment low despite fueling inflation.

Large recruiting bonuses for military enlistees and death benefits for those killed in Ukraine also have put more income into the country’s poorer regions. But over the long term, inflation and a lack of foreign investments pose threats to the economy.

Economists have warned of mounting pressure on the economy and the likelihood it would stagnate due to lack of investment in sectors other than the military.