Russian officials sparred publicly on Friday over how to boost the economy, as growth slows more than three years into its Ukraine offensive.
Moscow had shown unexpected economic resilience in 2023 and 2024, despite the West鈥檚 sweeping sanctions, with massive state spending on the military powering a robust expansion.
But economists have long warned that heavy public investment in the defence industry is no longer enough to keep Russia鈥檚 economy growing.
Businesses and some government figures have urged the central bank to further cut interest rates to stimulate activity.
鈥楾he indicators show the need to reduce rates,鈥� deputy prime minister Alexander Novak said at Russia鈥檚 flagship economic forum in Saint Petersburg.
鈥榃e must move from a controlled cooling to a warming of the economy,鈥� said Novak, who oversees Russia鈥檚 key energy portfolio in the government.
He described the current economic situation facing the country as 鈥榩ainful鈥�.
President Vladimir Putin on Friday urged officials not to let Russia fall into recession 鈥榰nder any circumstances鈥�, as some in his own government warned of a hit to economic growth.
Economists have warned for months of a slowdown in the Russian economy, with the country posting its slowest quarterly expansion in two years in the first quarter of 2025.
The Kremlin has said this is to be expected after two years of rapid expansion as it ramped up military expenditure to fund the Ukraine campaign, but officials including the country鈥檚 economy minister have warned of pain ahead.
鈥楽ome specialists and experts are pointing to the risks of stagnation and even a recession,鈥� Putin told attendees in an address at the forum in Saint Petersburg.
鈥楾his must not be allowed to happen under any circumstances.鈥�
鈥榃e need to pursue a competent, well-thought-out budgetary, tax and monetary policy,鈥� he added.
The call for more cuts to borrowing costs comes a day after Moscow鈥檚 economy minister warned the country was 鈥榦n the verge of a recession鈥�.
鈥楢 simple and quick cut in the key rate is unlikely to change anything much at the moment, except for... an increase in the price level,鈥� the central bank鈥檚 monetary policy department chief Andrey Gangan said.
The central bank lowered interest rates from a two-decade-high earlier this month, its first cut since September 2022.
The bank, which reduced the rate from 21 per cent to 20 per cent, said at the time that Russia鈥檚 rapid inflation was starting to come under control but monetary policy would 鈥榬emain tight for a long period鈥�.
The central bank has resisted pressure for further cuts, pointing to inflation of around 10 per cent, more than double its four-per cent target.
Russia鈥檚 gross domestic product growth slowed to 1.4 per cent year-on-year in the first quarter, the lowest quarterly figure in two years.
