Putin hails Russia's strong 2024 economic growth

Russia reported strong economic growth for 2024 on Friday as record spending on the military offensive against Ukraine outweighed the impact of Western sanctions.

Moscow's massive ramp-up in outlays on soldiers and weapons has helped it defy predictions of a deep recession after it launched its military campaign in February 2022.

But fast growth has triggered high inflation and deep labour shortages at home, worrying the Kremlin.

The economy expanded by 4.1 percent in 2024, Prime Minister Mikhail Mishustin told Russian President Vladimir Putin in a televised meeting, citing data from the Rosstat statistics agency.

That was the same as the pace of growth in 2023, Mishustin said -- revising up the previous figure of a 3.6 percent expansion for that year.

'Good result'

Putin hailed the economic performance, but ordered Mishustin to get a grip on rising prices.

"Overall, the result is good," Putin said.

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"The task for the current year is to reach a more balanced growth trajectory and achieve a reduction in inflation," he said.

Mishustin said it was "absolutely clear that the main challenge is inflation", which came in at 9.5 percent last year.

Surging prices for staple goods have become headline news in state media -- usually uncritical of the Kremlin -- in recent months.

The cost of butter rose 36 percent in 2024, the Rosstat statistics agency said, with overall food prices more than 11 percent higher.

Prices have been pushed higher by a rapid increase in state spending amid the Ukraine offensive.

State expenditure is set to be two-thirds higher in 2025 compared to 2021, before Russia's military offensive.

Putin said last year that Moscow is spending almost nine percent of its GDP on defence and security.

Slower growth forecast

Russian officials and economists say the economy is set to slow this year.

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A survey of analysts by the central bank published this week showed expectations are for a 1.6 percent expansion in 2025.

"Perhaps there will not be such significant growth of the economy in the following year, but it is very important to stop inflation," Mishustin told Putin.

After warning for months the economy was "overheating", the central bank said this week that growth was set to return to "more sustainable rates".

It has raised interest rates to a two-decade high of 21 percent in an attempt to bring inflation under control and cool the economy, but rising borrowing costs have caused anger among businesses and households.

The West had hoped sanctions would collapse Russia's economy and thwart Moscow's ability to fund its military offensive.

But Russia's economy is now more than six percent larger than it was before the offensive, the central bank says.

Before sending troops into Ukraine, Russia had faced almost a decade of sluggish growth and falling living standards -- suffering under sanctions and restrained domestic spending after Moscow annexed Crimea in 2014.

Source: AFP