Since Russia invaded Ukraine in February 2022, concerns about the state of the country’s economy have been surpassed by the goal of winning the war. While the Russian economy has seen growth, this is largely due to massive state spending on the defence sector and military-industrial complex.

Now, however, this war-related growth has started to dwindle and the Russian Government appears nervous. At the St Petersburg International Economic Forum, Russia‘s Minister for Economic Development, Maxim Reshetnikov, warned that the country’s economy was “on the brink of recession“. “We grew for two years at a fairly high pace because unused resources were activated,” added Russian Central Bank Governor Elvira Nabiullina. “We need to understand that many of those resources have truly been exhausted.”

In previous years, Russia‘s flagship economic forum aimed to showcase the country’s economy. However, due to the plethora of international sanctions imposed on Russia over the war with Ukraine, that pride has largely faded.

According to UN data published on Thursday (June 19), foreign direct investment in Russia has fallen sharply. Western investors were also largely absent at the forum itself in St Petersburg. Many multinationals that are still operating in Russia, such as PepsiCo and Nestle, have scaled back their businesses there.

“The reason the West came to the forum was because Russia was sizeable, growing and profitable,” Denis Denisov, managing partner at financial communications firm EM, told Reuters. “You don’t find these three components very often.”

Now, however, the forum appears to be returning to its original role as an event primarily for Russian businesses to network with politicians and less about PR.

According to Reuters, Sergei Aleksashenko, a former deputy governor of Russia‘s central bank now living abroad, said few serious businesses would consider Russia as an investment destination even if the war were to end tomorrow.

“Everyone can clearly see the situation with property rights is getting worse every day,” Aleksashenko said.