Russia’s economy minister warned Thursday that the country was “on the verge” of recession, issuing the downbeat message on the second day of a forum designed to bolster economic confidence.

The Russian economy has been marked by volatility since it launched its full-scale military offensive on Ukraine in 2022, with growth now slowing after a period of what officials called “overheating”.

Moscow reported strong economic expansion in 2023 and 2024, largely due to massive state defence spending on the conflict.

But economists have cautioned that growth driven by the defence industry is unsustainable and does not reflect a real increase in productivity.

“Overall, I think we are on the verge of a recession,” Economy Minister Maxim Reshetnikov told journalists at a panel on the second day of the Saint Petersburg Economic Forum.

He said this view was based on “current business sentiment and indicators” that were pointing to a slowdown.

“Everything else depends on our decisions,” Reshetnikov said, calling for the central bank to show a “little love for the economy”.

Russia’s central bank jacked interest rates to an eye-watering high of 21 percent last October to combat inflation and kept them at that level until earlier this month, when it eased them to 20 percent.

Economists had warned for months that the high interest rate and a downturn in manufacturing were weighing on the economy.

Russia’s economic growth slowed to 1.4 percent year-on-year in the first quarter of 2025, the lowest quarterly figure in two years.

Prices have also been rising across the Russian economy, driven up by the massive government spending on the Ukraine assault and widespread labour shortages.

Annual inflation ebbed below 10 percent in May but has been more than double the central bank’s four percent target for over a year.