🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Putin says Russia's economy can cope with higher defence spending on war

Published 10/05/2023, 12:03 PM
Updated 10/05/2023, 12:05 PM
© Reuters. FILE PHOTO: Russian President Vladimir Putin delivers a speech during а meeting of the Council of Legislators under Russia's Federal Assembly in Saint Petersburg, Russia April 28, 2023. Sputnik/Mikhail Klimentyev/Kremlin via REUTERS/File Photo

MOSCOW (Reuters) - The Russian economy can cope with higher military spending to fund the war in Ukraine now and in the coming years, President Vladimir Putin said on Thursday, shrugging off the impact of Western sanctions.

Defence spending will account for almost one third of Russia's total budget expenditure in 2024, government draft plans published last month showed, as Moscow diverts more resources towards prosecuting what it calls its "special military operation" in Ukraine.

Speaking at a meeting of the Valdai Discussion Club in the Black Sea resort of Sochi, Putin said Russia's economy, which shrank 2.1% last year but is on course to recover this year, had overcome challenges posed by sanctions.

"We had a budget surplus of over 660 billion roubles ($6.69 billion) in the third quarter," said Putin.

"On the whole, we have a stable, sustainable situation. We have overcome all the problems that arose after sanctions were imposed on us and have started the next stage of development," he said.

Higher prices for oil, the lifeblood of Russia's economy, have helped Moscow to narrow Russia's budget deficit in recent months after Western price caps and an embargo on seaborne oil exports squeezed energy revenues.

Russia's budget is expected to end the year in a deficit of around 1% of gross domestic product (GDP).

Putin acknowledged that Russia is facing stark labour shortages, but said that the central bank and the government have the tools to tackle any difficulties.

Russian authorities have been unable to stop the rouble from tumbling past 100 to the dollar and losing around a quarter of its value this year though. Successive rate hikes - the key rate now stands at 13% - have stopped the rot, but not turned the tide.

© Reuters. FILE PHOTO: Russian President Vladimir Putin delivers a speech during а meeting of the Council of Legislators under Russia's Federal Assembly in Saint Petersburg, Russia April 28, 2023. Sputnik/Mikhail Klimentyev/Kremlin via REUTERS/File Photo

Analysts polled by Reuters last week said they expect Russia's economy to grow at a slow pace in the years ahead, with double-digit interest rates to stay until 2025.

($1 = 98.6000 roubles)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.