"The Russian economy has fully recovered"
On Wednesday, December 4, Vladimir Putin spoke at the plenary session of the 15th forum "Russia Calling!" held at the World Trade Center in Moscow. The event was moderated by VTB head Andrey Kostin. "Izvestia" collected the most striking quotes of the Russian leader.
About the forum "Russia Calling!"
The "Russia Calling!" forum once again brought together representatives of business circles from dozens of countries to help make new contacts, outline promising projects and, of course, to discuss key trends both in global markets and in the Russian economy.
On the influence of Western countries on the Russian economy
You know that in 2022 our entrepreneurs, companies, and entire industries will face serious challenges due to the actions of some, let's say, countries or, more precisely, their governing elites. These countries have shown themselves to be unreliable partners.
Many production and logistics chains and cooperative ties that had been built up over decades were jeopardized and even destroyed.
We often hear in the political, military and economic spheres that these countries have set a task to inflict a strategic defeat on Russia, including in the economic and technological areas, to radically weaken our country's industry, to create an insurmountable deficit of goods in our market, to destabilize the labor market, to reduce the standard of living of our citizens. Obviously, these plans have failed, defeated.
After a difficult period, the Russian economy has not just fully recovered, but is also ensuring qualitative, structural changes, which is extremely important, and maybe the most important thing at all.
On the state of the Russian economy
Russia's technological, production, and logistical potential is developing, and ties with promising partners are being strengthened.
Last year, Russia's GDP grew by 3.6%, and in January-October of this year it increased by 4.1%, with the growth mainly concentrated in manufacturing industries, in sectors with high added value. Thus, in 10 months our manufacturing industry added 8.1%. Among other things, the automotive and machine-building industries are demonstrating outstripping rates.
On the increase in the inflow of specialists and reduction of unemployment
The inflow of specialists to high-tech sectors with high added value and qualified jobs is also increasing.
Thus, in September the number of those employed in the IT sector grew by 8.1% year-on-year. In the manufacturing industry - by almost 3.9%.
Structural changes in the labor market are evidenced by a decrease in unemployment in regions where it was traditionally high, as well as an increase in employment among young people under 25. We know that youth unemployment is a problem in many countries of the world. We also have such a problem, or rather, we used to have such a problem. The unemployment rate here is below 9%, although recently it has been as high as 20-25% in some regions. In general, Russia has a record low unemployment rate - only 2.3%. Against the background of most of the world's leading economies and developing countries, this figure is minimal.
On the budget system and government spending
Economic growth is positively reflected in the budget system. In January-October of this year, the surplus of the consolidated budget of the country and extra-budgetary funds amounted to about Br2.5 trillion. At the same time, expenditures, I want to emphasize this, amounted to less than 35% of GDP, which corresponds to the level of 2021.
Russian President Vladimir Putin at the VTB Investment Forum "Russia Calling!" at the World Trade Center
This shows that the government and the Central Bank are pursuing a very balanced policy. Taking into account the objectively increased spending on individual items, we are not inflating government spending, but are working to improve its efficiency.
On the fight against inflation
It is important to avoid distortions of key macroeconomic parameters and imbalance of certain industries. Among other things, it is necessary to curb inflation. So far it is at a rather high level - 8.8% in annual terms. To achieve positive results, we need coordinated actions of the government and the Bank of Russia.
It is necessary to use all instruments of economic policy correctly and wisely in the fight against inflation. At the same time, it is necessary to avoid structural inflections, including the risks of increasing income gaps between citizens and reducing the revenue base of Russia's regions.
The main answer to the inflationary challenge is to increase the supply of goods and services in the market so that their volume meets the internal demand of both citizens and businesses that plan to modernize and expand their production.
On the situation with retail and corporate loans
Yes, it should be taken into account that we are acting in objective conditions of inflation control, we are implementing strict approaches in the budget policy and we should adjust the credit policy accordingly.
I would like to note that since August the retail loan portfolio has practically stopped growing. In turn, the corporate loan segment continues to grow. At today's stage, this is the result we have been striving for.
Corporate loans are growing, which means that companies' investment plans are being realized.
On investments and affordable lending
It is important to pay attention to the debt load of companies with state participation. My colleagues and I talk about this all the time. The burden has increased significantly recently. Of course, we must take into account the large-scale investment programs of state corporations, as well as the social functions they perform.
Let me remind you that for many small and medium-sized companies, which are playing an increasingly prominent role, the availability of loans and borrowed funds is a key factor in investment activity.
By 2030, investments should add 60% in real terms to the level of 2020. Taking into account all the difficulties, investments in fixed assets of Russian businesses are growing for the third year in a row, despite all the problems we have or are trying to create from the outside.
In 2022, investment growth amounted to 6.7%, in 2023 - already 9.8%, and in the first nine months of this year - 8.6%.
About the Russian stock market
To support the desire of businesses to invest in development, expand capacity and create jobs, we will continue to strengthen the capital market and support the entry of companies to the stock exchange with their securities. By the end of the decade, the capitalization of the Russian stock market should roughly double to two-thirds of GDP.
This year alone, 19 primary and secondary share offerings have taken place in Russia. The issuers managed to raise 102 billion rubles. The result is quite satisfactory, good, but on a country-wide scale it is small. The Russian capital market should take a more active part in financing development projects and structural changes in our economy.
The Government together with the Central Bank should prepare a package of additional stimulating measures for issuers of shares to make it more profitable and interesting for them to enter the stock market. Among other things, it is necessary to increase demand for securities by ensuring effective protection of investors' rights and the necessary information transparency.
On retail investors and stimulation of the stock market
Today, mostly small companies enter the stock market, while many large organizations, leaders in their industries, are not represented on the stock market. This means that measures to support issuers should take into account both the needs of small businesses and promising start-ups, and stimulate large businesses to place their shares.
Of course, we also invite investors from friendly countries to our stock market. As I have said many times, Russia is part of the global economy, and we welcome counter capital flows.
At the same time, we emphasize domestic sources of financing so that our citizens and retail investors have an opportunity to invest their funds and earn money domestically. Today, according to experts' estimates, over 32 million Russian citizens are interested in buying securities. Their total assets exceed RUB 9 trillion.
On preservation of citizens' funds and insurance
This year a program to support voluntary long-term savings of citizens was launched. Contributions to them are insured and co-financed by the state, and one can get a tax deduction for the deposited funds.
As of November 22, more than 2.1 million depositors took part in the long-term savings program, and 145 billion rubles were raised. In 2026, the amount of funds attracted under the program should exceed 1% of GDP, that is, at least Br2.3 trillion. And it should steadily grow in the future.
To accumulate the funds of citizens, this year individual investment accounts of the third type appeared. With their help it is possible to invest in debt, make transactions on the stock market and at the same time receive tax benefits. I propose to supplement the functionality of this instrument, to make it so that an investor can choose an account for crediting dividends on shares registered in IIS, that is, he can use the income received at his discretion and, importantly, at any time.
From January 1, 2025, the share-based life insurance of citizens will be launched - in fact, it combines the principles of classical insurance and investment, when a citizen simultaneously invests in assets, in shares, receives income from them and at the same time insures his life and health.
There is a proposal to create such a financial mechanism, which will become a real family instrument of savings, will allow all working family members to receive a tax deduction. Accordingly, the amount of funds eligible for such a deduction should increase to at least 1 million rubles a year. I ask the Government, together with the Bank of Russia, to define the parameters of this mechanism for supporting families and to implement these decisions.
On new technologies in the banking sector
The Russian banking system and the stock market are developing dynamically on the basis of modern technologies. About three quarters of our adult citizens use cell phones and the Internet to transfer funds from bank accounts and for various financial services. More than 80% of payments for goods and services in our economy are made in non-cash form. The level of digitalization of financial services in Russia exceeds the global level, which confirms the high technological sophistication of this sphere of the domestic economy, its aspiration to the future, its ability to set big goals and work ahead of the curve.
It is planned to introduce an experimental legal regime so that banks can fine-tune the methods of remote authentication of clients without creating risks of violating anti-money laundering legislation.
On the investment climate of the Russian Federation
As you know, the World Bank is no longer present in our country, which means that it cannot assess the domestic business environment, but other objective structures can do so. We certainly have the relevant intellectual potential.
This year, the Agency for Strategic Initiatives of Russia assessed the business climate in our country and compared the results with other countries. The ASI used the same approach as the World Bank in its new rating. More than 800 criteria were taken into account: from starting enterprises to solving insolvency problems.
The study showed that Russia is among the global leaders in the investment climate rating. At the same time, Russia is certainly ahead of all countries in terms of the level of the regulatory framework and the quality of public services. In terms of such parameters as registration of enterprises and real estate management, it confidently ranks second.
About the digital ruble
At the same time, the Bank of Russia is gradually introducing the digital ruble. Within the framework of the pilot project, replenishment of funds and transfers of digital rubles between individuals and legal entities have been worked out. The project has already covered more than 9 thousand citizens and 1.2 thousand companies, and their number continues to grow. As agreed, from next year, settlements using the digital ruble should be used in the federal budget system, and from July 1, 2025, such an opportunity should be available nationwide.
Russia's leading position in financial technologies allows us to build flexible relations with foreign partners, promote integration projects, and benefit from the pairing of our countries' economic potentials. I am also referring to the investment platform that we are currently working on with our BRICS colleagues.
On the second chance for Western companies in Russia
I already said at the last forum, and in general: we did not kick anyone out, we did not squeeze anyone out of our market. Despite political pressure, many partners, including those from Western countries, have not left. Some of them continue to work in the same mode, about half of them, some of them have handed over management to controlled persons, and another quarter of them have really left.
Will we create conditions for those who want to return? We will not create special conditions.
But over the past two years, companies from other countries and Russian brands, the number of which is growing by leaps and bounds, have begun to occupy the vacated niches. It will be difficult to return to their former places. But we will not create any obstacles.
On sovereignty and native language
I was once at a birthday party for German Chancellor Gerhard Schroeder, and everyone there spoke English. Even the children. It's embarrassing. The level of sovereignty should be within. But today we are not talking about that, we are talking about the economy....
About the trend to the East and Russia's turn to the South and East
Everything from the East is better than from the West. We are only talking about the business environment now.
I hear that Russia has turned to the East, towards the Global South. Russia has not turned to the Global South and the East. Russia has been doing this for a long time, since the 2000s, bearing in mind the trends of global development and the development of the world economy.
Calmly, step by step. But we have been doing it for a long time. Our relations with China are developing regardless of the Ukrainian issue; it has become our largest economic partner before that. The West's share of global GDP is constantly shrinking, while the South and East are growing. And some economies are developing at quite unusual rates. Suffice it to look at Ethiopia, the growth there over the last 10 years has amounted to about 120%, in Bangladesh - over 80%.
The growth rate of the economies of developing countries will be twice as high as that of the countries that are called developed. We are naturally oriented to where we see growth and where the number of our partners is increasing, without looking for feedback from the outside.
On the creation of a unified international payment system
We are trying with our colleagues from BRICS to pay due attention to this. Not only because someone is causing us problems with settlements. The most important thing is that the world economy is developing, relations are developing, and the number of partners is increasing. Everyone wants not just safe ways of economic communication and settlements, they all want modern means of settlements that would reduce costs and increase the reliability of the financial sphere.
Of course, this implies the use of modern technologies, including digital ones. It is not just a question of creating digital settlement systems. Within the BRICS framework, we have proposed to our partners the creation of a digital investment platform, part of which should include settlements in digital units.
We agreed to create a working group on the basis of the BRICS Development Bank. We want to create such a platform that would allow us to invest in promising growth markets in South Asia and Africa. Moreover, it should be done in such a way that would be protected from inflation and allow central banks to promptly respond to the processes taking place in our association.
This is a fairly easy instrument to create, we need to agree on the directions of its development and investment in certain countries and projects. In my opinion, it would be very interesting both for the countries creating this instrument and for those who will use it.
About the development of logistics routes
The development of new logistics routes is an inevitable process due to the growth of the economy, commodity exchange and geopolitical risks. For example, the volume of cargoes to the Suez Canal has decreased, which is regrettable for Russia because the economy of our friendly Egypt is suffering. This is connected with geopolitical risks: the U.S. is quite aggressive in the Middle East, which causes a response.
Also, the opening of new routes is connected with the increase in the volume of trade turnover, interest in such routes as the Northern Sea Route is growing. Russia has exceeded the transportation volumes of the Soviet era by times and will increase them further. We have a whole program of building ice-class ships and icebreakers. There are now seven nuclear-powered icebreakers and 34 with conventional engines. Many countries, including India and China, are interested in working along this route.
The North-South corridor is also of great importance. The volumes of transportation along this corridor are constantly growing. Cargo is transported by road, rail and by the Caspian Sea. As for the plans in Iran, it is necessary to lay 162 kilometers of the logistics route. Now a number of technical issues have to be resolved by the Iranian side. It is a question of ensuring the laying of railroad tracks. Access to the Indian Ocean and the Persian Gulf is of interest to many shippers, as it is a direct route from the Baltic to the Persian Gulf. I am sure that this project will be realized. There are resources for this. Of course, we are interested in attracting investors to this project, as it minimizes geopolitical risks.
Trade and economic ties are good now, including work with the Eurasian Economic Union. We have signed an agreement on a free trade zone. Russia also has stable relations with Iran.
About the dollar and Trump
I agree that using the dollar as the world currency brings unearned money to the U.S. in large amounts. According to our experts, over the last 10 years they have received $10 trillion just out of the sky for the fact of using the dollar as the world's reserve currency. This means that they consume more than they produce. The U.S. continues to exploit other economies of the world for its own benefit at the expense of the dollar.
You said that U.S. President-elect [Donald] Trump threatened to impose sanctions and increased duties on anyone who doesn't use the dollar. As far as I understand, he didn't say that. He said: if someone prohibits the use of the dollar, the U.S. will respond accordingly. That is not the same thing.
The newly elected president has not been in the White House for four years, and in that time there have been changes in the world and U.S. economy. His successors and political opponents have done a great deal to undermine the fundamentals of the dollar as the world's reserve currency. The U.S. share of the world economy is shrinking, and thus the dollar's influence is also shrinking. <...> If there is a further decline in the use of the dollar in the world, they will be undermining the foundations of their economic power.
Finally, we have never abandoned the dollar, it is we who have been denied its use.
Even countries that are allies of the United States are reducing their gold and foreign exchange reserves (Izvestia) in both dollars and euros. Over the last 10 years, the reduction has amounted to about 13%. This happens naturally, and no one can reverse this process.
About gold and foreign exchange reserves, "Dutch disease" and investments in science
A legitimate question is why build up reserves if they can be stolen so easily. By the way, China has large foreign exchange reserves invested in US securities. First of all, no one used to think that it could be done so easily. Everyone thought that people making decisions in the economic sphere acted very conservatively and understood their own risks if they were to undermine international norms in the field of law.
For our part, we had to take appropriate measures, send to the "C" accounts the so-called dividends of Western companies that work for us. We are not enthusiastic about this either.
There is no final step towards seizing assets yet. The question is why. It is clear that it has always been a tool to reduce risks in case of any changes in the financial market. When excess income appears, the state withdraws part of the excess income, and when income falls, the state uses it.
I would like to draw your attention to the fact that from today our budget is calculated not on the basis of the prohibitive price of oil, which we have today, but on the basis of the price of $27 [per barrel]. It is important not to allow the "Dutch disease", and Russia has learned this lesson perfectly well.
We will do our best not to destroy our economy due to high oil prices, but on the contrary - to help it develop in an innovative direction.
As a rule, assets are invested in foreign securities. Yes, it has turned out that this is an unreliable way. Where should we invest? In education, science, real estate, deposits, minerals. These assets turned out to be more reliable than financial instruments of other countries.
On cooperation with Africa
The African continent has very good development prospects. We are aware of all the problems that Africa has, but the prospects are very good. These are not our assessments, these are the assessments of the world expert community, including the Western one. Many from Germany and other European countries say that they also want and plan to increase their activity on the African continent.
The level of global urbanization is 65%, and ours is still lower, and the same is true in Asia. This shows that urbanization is going to increase. The rate of population growth is very high, which means catching up with the standard of living. Modern means of farming will be applied and modern technologies will be introduced. This is a natural process of increasing our cooperation with Africa.
Russian President Vladimir Putin speaks at a plenary session of the VTB Investment Forum "Russia Calling!", December 4, 2024
Africa is a geographically quite remote continent, but it is close to us in spirit, because it is home to very courageous, freedom-loving countries that cherish their sovereignty and, relying on it, make and will continue to make decisions in the interests of their peoples. In this sense, Africa is a reliable partner, we have many ties, we have never been separated from African countries and peoples.
We are excited by the prospect of development of the African continent, and we will do everything to raise the level of its development. Unfortunately, the trade turnover here is not as big as we would like - about $25 billion, but the prospects are good. We know that at the two forums we have already felt the spirit of African leaders.
Now it has been decided to create a special fund for the development of our cooperation with African countries. Both bilaterally and in terms of working with various African associations, we will step up our efforts.
On cooperation with China in the automotive industry
Indeed, we did not start relations with our Chinese friends in the automotive sector yesterday. The real work began in 2015 and earlier. The first production appeared in Tula, then - in Kaluga. Firstly, this is due to the fact that Chinese manufacturers began to make goods better than in Europe - and cheaper.
Secondly, we believe that non-market restrictions are incorrect and harmful to global trade and production. They are politically motivated and will lower the competitiveness of those with whom they compete.
Yes, our Chinese friends have managed to attract the most experienced and promising specialists from the global automotive industry and create competitive products. But, like any country, Russia strives for maximum localization, i.e. production at our sites. For this purpose, there is the SPIC tool (special investment contract. - "Izvestia").
On supporting domestic producers
We support our domestic producers - apparently, [this] was unexpected for those who imposed certain restrictions on economic cooperation. We have 2.4% unemployment - there is not enough labor, all enterprises are working. Of course we need to adjust the investment process. But it is going on. We have significantly increased investments from friendly countries. It is impossible to block this process, it is going on.
We have created conditions, provided liquidity to financial institutions. Despite the fact that it is clear: there are issues related to the key rate of 21%, but despite this, the volume of loans issued by banks, primarily to legal entities, is growing.
On the investment climate and partnership with China
We have a whole set of instruments that maintain a good atmosphere for our investors. First of all, it is connected with guarantees of preservation and receipt of income. I am sure that the results of our work speak for themselves: our trade turnover has already exceeded $240 billion, which has never happened before. This is the best proof that we are acting effectively. In addition, we are constantly analyzing new tools in this area.
Almost 90% of our trade turnover is serviced in national currencies, yuan and rubles, and later we will use digital currencies and settlements within the BRICS framework. We are focused on ensuring that our settlements are reliable and secure.
About inflation growth
According to the Russian law, the Central Bank has its own powers, which do not overlap with those of the Russian government, including in the area of fighting inflation.
Inflation has risen, it is now 8.8%, last year it was about 7.5%, so the Central Bank had to raise the key rate to 21%. I will not give an assessment of whether this is good or bad. I just want to say that there are certain difficulties for the real sector of the economy, but lending continues.
There are pluses and minuses in terms of growth of incomes from placement of money funds of the population on deposits. On the one hand, it is good, deposits have grown, people's incomes are growing. But not everyone has deposits in banks. Such people are burdened with the burden associated with inflation. That is, the less well-to-do strata of the population are burdened by the fact that prices are rising. Not having deposits in banks, they do not receive additional income.
As for the production part, loans to the production sector and investments continue. The most important tool to fight inflation is to ensure sufficient output of goods and services. It is important to achieve a balance, when the economy develops, goods and services are supplied to the market at the required rates and in the required quantities, and inflation is reduced to the required rate. In our country it is 4%. The main thing is good, highly qualified and solidarity cooperation between the government and the Central Bank, despite the fact that their functions are delineated in the Russian law.
Simplification of international travel
This issue concerns those people who are actually engaged in practice in supporting strategic cooperation between Russia and China. The first is visa support. We do this, based on the principle of reciprocity, with China a little more than with other countries. The second is regional cooperation. The volume of interaction between the regions of the Russian Federation and the provinces of China is constantly growing. And this is natural, because people know each other, they constantly visit each other and see opportunities for development.
I would like to note that even today family members of foreign specialists living in Russia have the right to study in higher educational institutions. But more than that, unlike in many other countries, they also have the opportunity to get a job.
On a special platform for small and medium-sized enterprises within the BRICS framework
It is a very good proposal (to create such a platform. - Izvestia). We are still trying to do this. Since you have asked this question, I will ask our Brazilian colleagues, who will head BRICS next year, to analyze the main areas of cooperation.
This is very relevant for us, because under the import substitution program, many new Russian brands are entering the market, successfully replacing Western brands that have left us. We are talking not only about consumer goods, but also IT technologies and agriculture.
We have a growing need to expand our sales opportunities. We are extremely interested in this. I know that the same policy is being pursued in India at the initiative of Prime Minister Modi. We are also ready to locate certain production facilities in India.
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