Kathrine Frich
Funding further military increases remains a massive problem.
Every big event has a public face and a private reality. While cameras roll, organisers try to paint a picture of total stability.
But behind closed doors, the whispers often tell a completely different story.
Behind the curtain
The St. Petersburg International Economic Forum usually serves as a massive showcase. The Kremlin uses the event to project power and highlight strong business ties.
Yet the mood at the latest gathering was surprisingly gloomy. Russian officials and business leaders openly discussed stagnation rather than booming growth.
Back in May, Deputy Prime Minister Alexander Novak signaled trouble according to WP. He announced a significant cut to the country’s economic forecast.
The government has slashed its GDP growth prediction for 2026 down to a mere 0.4 percent. This drops sharply from the earlier 1.3 percent target according to regional news reports.
Funding the fight
Huge military spending drove strong results recently. The Russian economy expanded by 4.1 percent in 2023 and jumped another 4.9 percent in 2024.
Officials now call that an overheating phase. Following a controlled cooling, some regional analysts even warn of a looming recession.
The heavy focus on wartime production is drawing rare criticism. State Duma deputy Renat Suleimenov pointed out the flaw in relying on weapons.
“What kind of development, investment, and capital expenditure are we talking about? Neither tanks nor missiles have any consumer value: the economy produces them, but they cannot be used by society,” Suleimenov noted in an interview.
A closed door
The reality check continued away from the main stages. One revealing conversation happened during a private Sberbank business breakfast.
Economist Dmitry Nekrasov told attendees the current system could survive for a while. However, he warned that funding further military increases remains a massive problem.
The most striking moment came from billionaire Roman Trotsenko. The Aeon corporation founder did not sugarcoat the country’s financial reality.
“The situation is bad. And it’s bad because the old model that worked for many years has stopped working,” Trotsenko concluded.
Looking elsewhere
The forum largely avoided direct talk about the invasion itself. Instead, panels focused heavily on artificial intelligence and new investment routes.
The government knows the old reality is gone for good. Kremlin official Maksim Oreshkin made this completely clear to the attendees.
“We shouldn’t expect everything to return to normal or that Western sanctions will be lifted,” Oreshkin said, stressing a shift toward non-Western partners.
Sources: WP
