ST. PETERSBURG

Russia’s St. Petersburg International Economic Forum (SPIEF), widely seen as an alternative to the annual World Economic Forum in Davos, focused this year on the challenges of high interest rates and a strong national currency.

The 28th edition of SPIEF brought together senior officials and company representatives from 144 countries to discuss global and regional economic issues.

A total of 1,060 deals were signed at the event, with an estimated value of around $80 billion.

Bahrain was the forum’s guest country, and notable attendees included Indonesian President Prabowo Subianto, South African Deputy President Paul Mashatile, Chinese Vice Premier Ding Xuexiang, and Bahraini National Security Adviser Prince Nasser bin Hamad Al Khalifa.

Russian officials also noted an increase in the number of US representatives attending this year’s forum compared to previous editions.

Statements from top Russian economic officials stirred controversy, especially as Economic Development Minister Maxim Reshetnikov warned that the Russian economy is “on the verge of recession.”

He said inflation must be curbed but warned against policies that could excessively cool economic activity.

Bank of Russia Governor Elvira Nabiullina said inflation was easing more quickly than expected and that the central bank is planning to cut interest rates.

Russian President Vladimir Putin emphasized the need for economic measures taken against price hikes to ensure a smooth transition from overheating in the economy to more balanced growth and stated that under no circumstances should economic stagnation or a recession in Russia be allowed.

Russia's economy is forecast to grow just 2.3% this year, down from 4.3% last year and below the government's 3% target.

‘Fair value’ of ruble

Forum participants also addressed the performance of the Russian ruble, which has been strong against other currencies this year.

Sberbank CEO German Gref said the current US dollar/Russian ruble exchange rate of 78–79 is unstable and should be at least 100.

First Deputy Prime Minister Denis Manturov echoed the concern, noting that Russian exporters are struggling due to the strong ruble.

Andrey Gangan, director of the Bank of Russia’s Monetary Policy Department, stated that the Russian ruble reflects the state of the economy, emphasizing that there is a flow of capital into ruble-denominated assets as high interest rates restrict demand, including that of imports.

The Russian ruble has gained nearly 30% against the US dollar since the beginning of the year.

Sanctions and their global cost

During his address at the forum, Putin stated that countries seeking to affect the Russian economy via sanctions are only harming themselves.

“Efforts to harm us (with sanctions), including through the shadow fleet, will ultimately affect global oil prices, thereby affecting the very countries that seek to affect us,” he said.

Special Envoy Kiril Dmitriev said in an interview with Russian TASS agency that Europe has lost more than 1 trillion euros ($1.1 trillion) from not accessing Russian gas.