ST. PETERSBURG – President Vladimir Putin on Friday hailed Russia’s economic outlook, saying it has managed to curb inflation and ease its reliance on energy exports.

His optimistic account in a speech at the St. Petersburg International Economic Forum contrasted with somber statements by some members of his government who warned at the same conference that Russia could face a recession. Economic Minister Maxim Reshetnikov had said Thursday that the country is “on the brink of going into a recession.”

Putin mentioned the recession warnings, but emphasized that “it mustn’t be allowed.” He pointed out that manufacturing industries have posted steady growth, allowing the country to reduce its reliance on oil and gas exports.

“The perception of Russian economy as based on raw materials and dependent on hydrocarbons exports have clearly become outdated,” Putin said, adding that the economy grew by 1.5% in the first four months of 2025 and inflation has dropped from double digits to 9.6%.

Putin has used the annual forum to highlight Russia’s economic prowess and encourage foreign investment, but Western executives have shunned it after Moscow sent troops into Ukraine in 2022, leaving it to business leaders from Asia, Africa and Latin America.

The economy, hit with a slew of Western sanctions, has so far outperformed predictions. High defense spending has propelled growth and kept unemployment low despite fueling inflation.

Large recruiting bonuses for military enlistees and death benefits for those killed in Ukraine also have put more income into the country’s poorer regions. But over the long term, inflation and a lack of foreign investments pose threats to the economy.

Economists have warned of mounting pressure on the economy and the likelihood it would stagnate due to lack of investment in sectors other than the military.

Putin said the growth of military industries helped develop new technologies that have become available to the civilian sector.

He vowed to continue military modernization, relying on lessons learned during the fighting in Ukraine.

“We will raise the capability of the Russian armed forces, modernize military infrastructure and equip the troops with cutting-edge equipment,” Putin said.