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President of Russia Vladimir Putin: Good afternoon, colleagues.

I think that we can get down to work.

There is quite a distance between us, but I do hope that our technical staff have made all the necessary arrangements so that you can hear me well. I also hope that I will be able to hear you clearly.

Mr Peskov, I think that we can begin without any lengthy introductory remarks, since this would be more useful and interesting for everyone.

During this meeting, I will try to answer your questions, and, without any opening remarks, satisfy your curiosity and inform you on the outcomes of this year, as well as what we expect in the near future, and what we will strive to achieve in our work.

Mr Peskov, please.

Deputy Chief of Staff of the Presidential Executive Office – Presidential Press Secretary Dmitry Peskov: Let us begin.

To start with, I would like to give the floor to the true doyen of the Russian journalistic corps – one of the Interfax agency leaders, Vyacheslav Terekhov.

Please pass the microphone to the first row.

Vyacheslav Terekhov: Good afternoon, Mr President.

The sound will be somewhat muffled, a mixed sound, as radio operators say.

You just said you will talk about further economic development – the world has been waging a global war on the coronavirus for the past two years, and now we will be fighting the Omicron variant, of course. How has this war affected the Russian economy? It has indeed affected almost everyone in some way. What are the ways out of this economic crisis, out of this pit, what drivers are there? Do we have to wait until everyone gets vaccinated before we can discuss the possibility of economic growth?

And the most important question, of course: how do you assess the work of your ‘general staff’ – the Government and the Central Bank – during this ‘war’?

Sorry, when I mentioned the Central Bank just now, I remembered that my questions have always referred to the Central Bank, during the past three or four news conferences, except the most recent one – it just happens.

Thank you.

Vladimir Putin: If I provide full answers to all your questions, even if I succeed in this task, I believe we could round up this news conference after that. These are very broad questions. In fact, they touch upon our main efforts, as well as those of the entire world, which, as you have mentioned, has been fighting the coronavirus.

This struggle continues, and we are aware of the dangers that Omicron, this new strain, poses. I think that we will have an opportunity to get back to this topic during today’s meeting.

As you may know, a group of Russian scientists and experts is now in South Africa, where their colleagues actually discovered this new strain. They are working there, and are quite successful at that. Once again, I would like to thank our colleagues from South Africa.

As for the impact this situation has had on the Russian economy, and what we are to expect in the near future, we have spoken about this, in general terms, many times.

Faced with the challenges posed by Covid-19 and the restrictions the economy and the social sector have had to face in this connection, it is obvious that the Russian economy has been better mobilised and prepared to withstand these shocks compared to many other developed economies around the world, if we look at the top five, six, seven or ten major economies, or even twenty. I will discuss this in more detail later during our news conference today.

The Russian economy declined by three percent, which is much better than many of the world’s leading economies, and we recovered faster than many others.

You know the numbers. Even last year, we could see the trends, and today I even have a chart here with me, and will share this information with you in order to be precise. GDP growth is expected at the level of 4.5 percent this year. It has added 4.6 percent as of the end of October, while manufacturing increased by 5 percent, and the processing sector grew by 5.2 percent.

Crop yields will be slightly lower in 2021 compared to the previous year, which is due to the weather. We had 133.5 million tonnes in 2020 and now have 123 million tonnes. Still, this is a very robust result which not only enables us to satisfy our needs, but also provides for a substantial export potential.

Fixed capital investment was up 7.6 percent as of November. We expect this indicator for the entire year to come in at 6 percent, up from a 1.4 percent decline in 2020.

The construction sector performed quite well, with a record high of 90 million square metres built. This is the first time we have achieved this figure in Russia’s contemporary history. I would like to congratulate all those involved in the construction sector, from the top executives to on-site construction workers, with this milestone.

Thank goodness, average wages have started to grow in real terms. There are also changes in terms of real disposable income. We had a 2 percent decline in 2020, but this year we expect this figure to rise.

Of course, we will talk about inflation. We expect the inflation rate to be 8 percent.

It is much higher than the forecast. But, even adjusted for inflation, real income has still increased by 4.1 percent. Our experts estimate that real income will show a 3.5-percent annual growth. Of course, this will not be true for all categories of citizens. Naturally, it is an average rate and I want to stress this once again, when people watch this and listen to this, they might say: it’s an average again. But we have to talk in average numbers since they serve as a certain benchmark. I think we will cover the topic of personal income in more detail today.

We set a goal of returning to the pre-pandemic unemployment rate – and it did go down. The unemployment rate before the pandemic was around 4.6‒4.7 percent. The current rate is 4.3 percent. It may go up a little to 4.4 percent by the end of the year. This is a very good indicator for the performance of the economy in general even though there are certain difficulties and challenges related to the labour market such as, for example, the number of people working at the construction sites we have just mentioned. It is a serious issue.

Now, I would like to speak about the trade surplus. Last year, despite all the difficulties, Russia’s trade surplus amounted to 94 billion [US$]. This year, the figure has almost doubled, reaching 184 billion, which is also an excellent result.

Russia’s foreign debt has slightly decreased. It is the lowest level of foreign debt in the world, around four percent.

What other important indicators speak for the quality of governance and the performance of the entire state, the Government and the Central Bank, in particular? Our international reserves have grown from US$595 to US$625.5 billion. The National Welfare Fund is growing as well and currently amounts to US$185.2 billion. All these figures are an indication of stability and good macroeconomic results.

There are issues that cannot but cause concern, including life expectancy, which has slightly decreased from 71.5 to 70.1 years. We will most likely cover this topic today as well. It is one of the negative consequences of the coronavirus pandemic.

Right. So, on the whole, I believe that both the Government and the Central Bank deserve – let us be modest – an acceptable score. The results are positive.

Now, about the growth drivers. Your question was about the potential growth drivers, and about vaccination – if we need to have the entire population vaccinated or not.

Look, we have already spoken many times about the growth drivers for our country based on the specific situation that has developed over a fairly extensive period. We can even consider the entire post-war period, since 1945. What are our challenges and what are the drivers, accordingly?

I have just spoken about an unfortunate decrease in life expectancy, an increase in mortality in our country, and in this regard, one of the most important problems, one of the most important challenges that we face is getting more acute – I am referring to demographics. It is a challenge both from a humanitarian point of view and from the geopolitical perspective as well, I mean the country’s population – 146 million for such a vast territory is definitely not enough; economically too, we have a workforce shortage.

As far as I know, the working age population is now just above 81 million. We must drastically increase this figure by 2024, by 2030. This is one of the factors of economic growth, let alone – I would like to emphasise this once again – the geopolitical and humanitarian components of this most important matter.

Therefore, preserving the people that Solzhenitsyn wrote about is becoming one of our most important tasks and one of the drivers of growth.

Second. What other growth drivers? The next driver is infrastructure, infrastructure development.

In this regard, I can say that we are making very strong efforts on this track. You know that we are channeling 500 billion rubles of federal funds directly towards the development of infrastructure. Then there are the National Projects; we started with 260 billion, I believe, then more than 400 billion, and next year, we will allocate 460 or so. We plan to allocate another 2.5 trillion rubles from the National Wealth Fund in the next few years – 2.5 trillion overall.

Of course, the third growth driver is increasing labour efficiency but this includes a whole set of programmes from education and digital transformation to healthcare, which we have already mentioned. This includes an entire set of programmes. Most of them are ready, so we know what to do. We have earmarked the resources needed to move in this direction, and we provide for regular allocations. The funds to this effect are available. All we need to do is set up this work properly and achieve maximum returns on every ruble we invest in delivering on these objectives.

Finally, one of your questions was about vaccinating the entire country. Unfortunately, in Russia the vaccination rate is low, just like in many other countries – take, for example, some European countries where the low level of vaccination is also a matter of concern. This is the case for Germany with its developed healthcare, but even there the healthcare system, one of the most effective in Europe, faces a lot of criticism.

What is the vaccination rate in Russia? As of today, or maybe yesterday, it was 59.4 precent. I had no doubt that this would be one of the main topics during today’s news conference, so I talked to Ms Popova and Ms Golikova. The figure of 59.4 percent is where we are in terms of achieving herd immunity in Russia. This includes both those who have recovered from the coronavirus infection, as well as those who have received the jab. Some 70 million people have received the first dose, and a little over 70 have had both.

This is not enough. We need about 80 percent of our population to be immune to achieve herd immunity. I hope that next year, at least by the end of the first quarter or in the second quarter, we will have reached this level. Some countries are already talking about the need for 90–95 percent to be immune in order to achieve herd immunity.

This is how things stand, more or less.

Thank you.

Dmitry Peskov: Thank you.

Moving on, I suggest that we go through Russia’s major news agencies.

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